Form 1099-K

We prepare small business tax returns for almost 300 Fort Wayne businesses every year.  In fact, our firm specializes in small business tax preparation.  A greater percentage of our clients are small business owners than any other firm I know of!

The Internal Revenue Service (IRS) is at it again.  The IRS is demanding more documentation with regard to third party payers.  Basically, if a business accepts credit cards or PayPal as a method of payment, the business will receive a 1099-K from the third party payer.  This 1099-K will show gross receipts broken out by month.  This will create several issues for small business owners.  The largest issue is a difference between revenue and gross receipts.  Gross receipts include things like sales tax and tips – these items are not revenue; however, the 1099-K will list them as revenue.  Most 2011 business tax forms will have a line which says “Merchant card and third-party payment.  For 2011, enter 0″.  The Internal Revenue Service isn’t even sure what they will do with this information; but, it decided to “muddy up the waters” anyway by requiring third party payers to issue 1099-K forms.

If you run a small business in the greater Fort Wayne metro area please give us a call today at 260-338-0833 and ask for Mike or Brent.  We would love to talk to you today!

Mike Sylvester MBA, CPA/ABV “Accredited in Business Valuation”