Like most small business owners, you may be wondering how and when some of the new federal laws and health care reform measures from the Obama administration will actually affect your business.
To help keep you in the loop, here are just a few significant provisions and revisions of the Affordable Care Act. Thankfully, not all of the news is bad. In fact, some of these may even help you find relief.
- Bad news: All employers who provide employer-sponsored health care coverage during the calendar year will be required to report the cost of that coverage on Form W-2 issued to employees. This requirement applies to federal, state, and local governmental entities.
- Good news: According to the IRS document about a special transition rule for small employers, if your business filed fewer than 250 W-2s last year, reporting is still optional; this transition rule will apply until further guidance is issued, and is expected to be in place until at least 2014.
- Bad news: Code Sec. 6041(a), Section 9006 of the Affordable Care Act requires that all businesses file a Form 1099 when they make annual purchases aggregating $600 or more to a single vendor, other than a tax-exempt organization, for payments made after Dec. 31, 2011. Most troubling was the fact that this repealed the long-standing reporting exception for payments made to corporations, which meant issuing 1099s to just about everyone—landlords, fuel providers, yellow page ads, Web hosts, utilities, office supply stores, and even the local pizza joint if you spend more than $600 per year for feeding staff.
- Bad news: Ssince the “1099 Act” set the law back to its old requirements, you still need to report accordingly, especially since it didn’t repeal the increased penalties for failing to file a 1099 on time and for failing to provide correct payee statements. The increase in the information reporting penalties were part of the Small Business Jobs Act (H.R. 5297). The penalty increases went into effect on Jan. 1 and remain in effect.
- Good news: While you still have some 1099s to complete, the Small Business Jobs Act helps businesses cut down on other laborious paperwork. For instance, now cell phones are no longer treated like computers as “listed property.” Before the law, you could only write off the cost of cell phones in the year they were bought if you could show that business usage was more than 50 percent and you had records to back this up. The new law “delists” cell phones, allowing you to expense their full cost. If you give your staff company-paid cell phones for business use, your employees no longer need to maintain records of their business and personal usage.
So, although the Affordable Health Care Act will mean increased work for most businesses at some point, the phase-in period is quite long, and various government agencies are providing guidance.