1099 REQUIREMENTS AS A REULT OF HEALTH CARE LAW

The new health care reform legislation will require businesses to report all payments in excess of $600 for sevices or merchandise to the Internal Revenue Service on a 1099. In essence any purchase that a business makes will have to be reported on a 1099. Uncle Sam projects that they will raise 17 billion dollars over a 10 year period. The intitial year for reporting will be in 2012.

This requirement will obviously be an additional cost for all business as well a problem for many small businesses that do not have the resources to comply with these new requirements.

It is always interesting to see lawmakers passing legislation and not taking into consideration the burdens they put on small business. Please visit out website at www.bspj.com

INSTALLMENT SALE TRAP

The economy is still "on the mend "and we have not seen an increase in lending from the banking system. To create cash we have noticed that some businesses may be selling assets . If the buyer pays the note over a period of time the seller can pay the tax on the sale as he receives the funds. This will provide the seller with cash over a period of time. But seller BEWARE!

If the asset sold has been depreciated over a number of years you need to pay tax on the gain attributable to the "recapture of depreciation" in the year of sale. The consequence could be disastrous and may result in all of the first years proceeds ,from the note ,going to Uncle Sam. Additionally,it may cause the seller to come out of pocket for the taxes in year one.

If you are looking to create cash through a sale,specifically an installment sale, be sure you get the correct advise regarding the transaction to maximize your cash flow. BSPJ can help and you can learn more about our firm at http://bspj.com

FINANCIAL CONTROLS TO HELP PREVENT FRAUD

Businesses of all sizes are subject to theft and fraud . Usually, the smaller the business the less financial controls exist because of the smaller number of employees. However, as a business expands owners do not pay enough attention to putting controls in place. Below are some bullet points that need to be considered in instituting some financial controls and possibly minimize the risk of fraud or theft.

• Keep Accounting Duties Separate (i.e. the person who opens the mail should not post the accounts receivable)
• Guard your company checks(be sure they are prenumbered and locked in a drawer)
• The owners should receive the bank statements and review cancelled checks.
• Require vacations and cross training
• Understand your financial statments (savvy employees will take advantage of owners who do not understand their numbers)
• Establish a budget and make comparisons

These are just a few of the steps one can take in order to ensure proper financial controls of the business. We have uncovered fraud for many clients and usually one of the points mentioned above was not being implemented.