Beware

How is the government going to bridge the tax gap of over $300 billion plus in lost tax revenue? They are going to do it with a little help from all of you. You see, as it stands now, if you own a small business and have say a painter come in and do over $600 of work in your office, you have to issue them a 1099 at year end. Now starting in 2012, the burden will fall on you to issue 1099's for any vendor who provides goods or services over $600. That means even the $600 or more in toilet paper you buy for office supplies at Target will bring the need to issue a 1099.

In order to do this, small businesses will need to track how much is being spent throughout the year to each vendor (this should be a step already being done by your trusty accountant). Also, the way it is written, if a vendor refuses to give you their federal tax ID number, you will be forced to withhold 28% for taxes.

Only those companies that issue 250 or more 1099's per year are able to file electronically. This means for all those who fall below this number, 1099's will have to be issued in paper form. Sounds to me like the IRS might be hiring soon.

Outsourcing your accounting

There are several reasons why outsourcing the accounting function of your business is most beneficial to your operations. The most important factor to consider is allowing yourself to be the expert in what you do and letting someone who is an expert in the everyday accounting functions be the expert in what they do. This in return provides a win-win situation, allowing you to focus on growing your business and also having up to date, valuable financial information that is reliable and will allow you as the business owner to make important business decisions. Here are the top three reasons why outsourcing is most essential:

1. Higher Profits
Through financial analysis and having an accountant use tools such as budgeting and forecasting will allow you to make effective decisions as to what is working, what might need some changing and what should be eliminated all together. If you are just starting out, finding where that breakeven point is will allow you to see where you need to be for growth

2. Stress Free Tax Time
Believe it can happen? Sure it can. By having an experienced accountant handle your day to day accounting functions, you can be certain that your financials are accurate and also allow for proper tax planning throughout the year.

3. Financial Data on demand
There is nothing worse than scrambling through piles of receipts and check stubs to find that bill you paid or trying to figure out what receivables are past due. By outsourcing the accounting function of your business, this information should be available on demand.

Did I mention that by hiring an outside bookkeeper, you’re typically saving an average of 20-30% what you would, had you hired a fulltime accountant? Learning to let go and leave the accounting to someone else can be a challenge at first, but it is an effective way to make your business better over time.