If you’re a small business owner, you’ve probably heard the news that the IRS was planning to lower the reporting threshold to $600 for third party settlement organizations. Fortunately, they recently announced a delay in the implementation of this change. Read on to learn more about why this is good news and what it means for your business.
The delayed implementation of the lowered reporting threshold is great news for small businesses owners everywhere! The new legislation was enacted as part of the American Rescue Plan Act (ARPA) of 2021 and would have required third-party settlement organizations to report payments made through them to both the IRS and payees. This could have been very time consuming and expensive for businesses who are already struggling.
Why Is This Good News?
The delayed implementation of the lowered reporting threshold is great news for small businesses owners everywhere! The new legislation was enacted as part of the American Rescue Plan Act (ARPA) of 2021 and would have required third-party settlement organizations to report payments made through them to both the IRS and payees. This could have been very time consuming and expensive.
How Can Businesses Prepare?
Although there is no requirement currently, it’s still important that businesses are aware of any potential changes coming down the line so they can plan accordingly. In order to ensure compliance in case any new regulations come into effect, businesses should make sure all payments received from third-party settlements are accurately tracked and recorded so that they can easily file their taxes at the end of each year. Additionally, consulting with an experienced tax professional can help businesses stay informed about any updates or changes in legislation so they can be prepared if/when they do occur.
Donna Harris, MBA, also holds a BSci in Accounting and is the owner of Bookkeeping Made Simple.
Donna Harris
Owner
Donna Harris, BSci Accounting, MBA, founded Bookkeeping Made Simple with the understanding that small businesses is the heart of the American economy. After offering to do books for a friend who said he didn't have enough work to keep someone in the office 20 hours a week, she recognized the need for an efficient, online system. She has 20 years of bookkeeping and accounting experience and is excited to help small business owners achieve their goals. She enjoys spending time with her family and traveling whenever possible. She also loves reading, hiking, camping, cooking, yoga, and fitness. A huge believer in lifelong education, she is currently working on her master's in Accounting.