What do the new 1099 regulations mean for your organization?
One of the biggest stories to come out of 2010 that is continuing to unfold in the New Year is the Patient Protection and Affordable Care Act (the healthcare reform bill) which contained a provision that will require all businesses to file 1099 forms if they purchase $600 or more in goods or services from another business during the calendar year.
Previously, only unincorporated businesses that purchased $600 or more in services were required to file a 1099 with the IRS and the service provider. The new rule extends to all companies, charities and state and local governments; and to purchases of goods and products as well as services. The added reporting burden is expected to bury all businesses in paperwork, which may stunt any hopes for business growth.
How will this change in regulations impact your organization's AP department? Industry experts are projecting an increase in the reporting workload by five to 10 times, which means companies will have to adopt more efficient accounting processes in order to cope.
In a recent article that appears in AP Matters, Diane Sears discusses the implications of the new 1099 regulations in detail and highlights automation as a key strategy that will help AP departments efficiently handle the paperwork burden. While the number of AP departments that have automated their invoicing is relatively low at (approximately three percent in the U.S.), the buzz surrounding accounts payable automation is increasing. This technology not only removes the paper but also provides organizations with transparency in the supply chain and overall workflow efficiency throughout the procure-to-pay process. Sophisticated AP automation systems are also capable of providing the C-suite with visibility that cultivates more informed business decisions while alleviating the strain caused by the anticipated influx of 1099 forms.
For more information on changes in 1099 regulations and what they could mean for your organization, read the full AP Matters article here.
