1099-K... Another Reason to Keep Accurate Records
Most of you are familiar with Form 1099. As you know on your tax return, you always want to declare sales greater than your total 1099's received.
However, there is a new form in town.... the 1099-K and it doesn't play fair.
In 2008, President Bush signed into law a bill known as The Housing and Economic Recovery Act of 2008. Now businesses that accept credit and debit cards (or 3rd party networks, such as Paypal) when making sales to customers are receiving this form from their credit card processing company. The 1099-K reports the total gross payment transactions for the year........
So what does this mean to the small business owner?
Another potential red flag..... If you legally report all of your sales and have at least 10% of your total sales in cash, then the 1099-K will probably mean nothing to you.
Some will be unlucky...... If your sales receipts come exclusively from credit card payments (online businesses, for example), then the 1099-K will show an amount greater than your reported sales. This can happen because sales tax is included in your gross receipts on the 1099-K. If you are one of the unlucky few that fall into this category, then your chances of an audit will probably increase.
What do you do?
If you are one of the unlucky ones who has a 1099-K in excess of sales, we will help you build a strategy to keep the IRS from determining you are an audit target.
This will be easy for us to do if you are one of our clients that engages us to help them keep accurate books and records. I don't worry about the IRS calling. I am confident we will send them on their way without them getting anymore of your hard earned money.
And if you don't keep accurate books and records?
Any client that does not have us helping them keep accurate books and records with one of our QuickBooks Health Check analysis services runs the risk of waiving the red flag at the IRS and having a difficult time proving they have declared all of their sales.
Alert to all of our clients...
If you have a friend who is in business and they are not on an active monthly or quarterly program of having their QuickBooks and records analyzed by a CPA firm like ours, send them this email and tell them to RUN to our office for help!!!......
And if you do have us performing QuickBooks Health Checks for your business.......
Then sit back in your chair and smile because you have made the right decision to hire a CPA firm such as ours to help you through the ever changing maze of IRS reporting requirements...
...and there are more reporting requirements on their way with BIG penalties.
So, stay tuned.