Here’s the deal.

The provision has to do with the 1099 forms that all businesses
are required to file regarding payments over $600 to freelancers
and contractors for personal services rendered.

This rule applies to sole proprietor businesses and excluded
corporations.

The paragraph basically changes the definition from “personal
services rendered” to “all services and goods” rendered from
“all organizations” (including corporations)

Basically, this means anytime your company spends more than $600
with ANY other business, you will be required to file a 1099
form. The thinking is that by doing this your suppliers will be
forced to report all of their income.

Unfortunately, the cost of this enforcement will be funded by
you and me. Here’s why.

It’s kind of a hassle to get a W-9 form from a freelancer to
request their Tax ID number. But most businesses, only have a
small handful of these, so it’s annoying but not the end of the
world.

Now we have to do the same for every company where we spend more
than $600.

For example, I spend several thousand dollars a year with hotel
chains like Marriott and Hilton. Now I need my bookkeeper to
contact their CFO’s office to request their Tax ID.

But wait, it gets better…

If I recall correctly, each Marriott location is independently
owned and operated. This means that for EACH Marriott location
I’ve stayed in for say more than 4 nights (where my bill would
often be over $600), I need to have my bookkeeper contact their
financial office and have each location send back a form with
their Tax ID on it.

The same goes for the telephone company, Office Depot, Amazon,
my web host, all of my favorite restaurants where I host
business lunches or dinners, the airport shuttle service, the
printer, Apple, Dell, AT&T, the merchant account, Hertz, the
attorney, the payroll service, the domain registrar, and more.

It’s hard enough calling their customer service line to give
them money, now I have to have someone call them to get a IRS
tax form filled out?

I seriously doubt Marriott, AT&T or Hertz is under reporting the
income they make from me — but now I’ll need to take on the
burden of a few thousand dollars in expense to go chase
paperwork.

These are dollars that could have been spent with suppliers
(helping them create jobs), or paying new or existing members of
my staff (boosting their household incomes… and spending in
their local economy), or to invest in marketing to get more new
business (which in turn allows me to spend more with my
suppliers and staff).

I have gone on record repeatedly to encourage clients and
readers that the economy remains highly uncertain. The long term
debt problem in the US in particular has not been resolved by
the “recovery”.

There are many unforeseen consequences that remain.

This is one of them.

And if by some small miracle enough people complain about the
useless paperwork requirements before it takes effect in 2012,
then I’m certain there will be another unforeseen consequence to
take its place.

While I know many of you feel that the business environment has
become hostile to businesses both economically and politically,
I actually do think it’s a mistake to let these external changes
get you riled up emotionally.

Are these kinds of headaches a problem? Yes, absolutely.

Is it worth more than a passing moment of your time and focus?
Definitely not.

Is it excuse for delivering sub-par financial performance this
year? Heck no. That’s a total cop out.

Good leaders deliver the numbers no matter what.

And keep in mind that your competitors face these paperwork
burdens as much as you do. So while these kinds of these are a
total pain, at least they are equally painful to everyone.

So take small mental note of these recent events, and continue
to stay focused on your customers, your company, and your
competitors — and generally in that order — and you’ll do fine.

To Your Profits,
-Victor Cheng

Amercia’s Business Coach(r)

Victor Cheng is revenue growth adviser to owners of professional services and online business within $1 million – $25 million in sales.

As a former McKinsey consultant and the author of four books, he has
been featured as an expert commentator by Fox, Time magazine,
Inc magazine, Fortune Small Business, and The Wall Street Journal.

He publishes an email newsletter on revenue growth for
owners of high growth business.

To subscribe to Victor Cheng’s E-Letter please visit:
http://www.askvictor.com

In order to help “bail out” small business owners, Victor is giving away 1 million copies of his book, The Recession-Proof Business (Get your free book HERE).

As a small business owner myself, I understand it’s scary when business gets slow – I’ve been there! But, instead of retreating, it’s best to get EDUCATED and create ACTION to build your business so that you’ll ultimately PERSEVERE. Remember – ACTION ALWAYS CANCELS OUT FEAR.

If you are a small business owner or entrepreneur, I wish you a profitable second half of 2009. – AD

Fed up with President Obama’s ongoing neglect of small business owners, San Francisco entrepreneur Victor Cheng will offer to “bail out” 1 million small business owners starting July 4, 2009.

As America’s Small Business Coach, he will be giving away 1 million copies of his book The Recession-Proof Business: Lessons from the Greatest Recession Success Stories of All Time.

“According to the Small Business Administration, small business owners create 7 out of 10 new jobs in this country. It’s crazy for Obama to be giving the big guys all the money and not doing more to help the little guys-especially when the little guys are creating the jobs that will drive our economy’s recovery,” says Cheng.
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