One of our members, Mike Favazza, Favazza & Associates, sent me this email. I thought it was great information that all of our members should know. I hope you find it informative as well.

Erin

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I'm a firm believer in EVERY business accepting credit cards as much as possible. If your profit margins are affected by a 3% merchant fee, then you must do something first about your margins!

It really is short-sighted thinking to not allow your customers to pay you in the easiest way possible for them.

But today's email is actually not about "selling" you on accepting these cards -- I actually need to warn the vast majority of my clients who do, in fact, take these cards that your ducks better be in a row (your debits & credits, that is)!

Here's what I mean ...

[By the way, I suggest you forward this to your biz owner friends, to make sure they have things covered.]

Michael Favazza's
"Real World" Business Strategy
1099 Reporting Starts Now -- Are You Ready?
With all of the Congressional action at the end of the year, some people thought that Congress did away with the infamous "1099 reporting" requirement in the Affordable Care and Patient Protection Act.

Wrong.

Starting January 2011 (that would be NOW), all 3rd -party payer groups will start reporting transactions to the IRS. That means if you accept credit cards, Pay-Pal (even on Ebay), or any other form of 3rd party collection-type card, you're on the list to get a Form 1099-K in 2012 from the IRS.

And you'd better be ready for that right about now. It's no secret that the reason for these requirements is to create powerful audit and enforcement tools, and find "hidden" sources of tax revenue for the government.

[The only exceptions for this reporting requirement are if you A) Have less than 200 of these transactions in the year or B) Make less than $20,000 gross in the year from them. In this case, you're exempt.]

Given the IRS' track record, it's likely that this will be a bit of a mess at first. But the worse news is that if you happen to get a form with a wrong amount, it'll be up to you to report to the IRS how much it should have been.

So, here are the first three things you need to do THIS month.

1) Make sure your revenue is populating properly into QuickBooks or your other accounting software
2) Reconcile your merchant account with your reported sales, on a regular basis
3) Consider setting up two bank accounts for your business: one for merchant sales only and one for your regular checking account activities, (You can then transfer money from the merchant account to your checking account. This little trick will make it much easier to reconcile.)

But the most important thing you can do is to make sure that your accountant is on top of this for you.

In case they're not, find one that is. [ahem.]

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I hope this helps.

Warmly,

Michael Favazza