Payment Apps and the IRS
CashApp and Zelle are convenient methods for small business owners to conduct cashless transactions. It's great for small businesses because all clients do not have a bank account or a small business owner may not have a payment processing system yet. ("Yet" is the pivotal word here. If you are conducting cashless transactions, you need a payment processing system like Square or Stripe. They allow you to collect in-person payments via debit/credit card.) For the homespun business owner, you may be using one of those apps to recollect all of your transactions for the year. Your accountant may despise the idea at tax time, even so, it happens.
This year though, those payment processing applications will be required to send out Form 1099-Ks to individuals or businesses that use their services under reduced conditions. Don't worry, this isn't a negative action by the government. It simply provides you, the small business owner, with a method to be able to track your revenue come tax time. It's no different from getting a regular 1099 that is issued to individuals working as independent contractors. And really, there is no difference in the legislation. They just lowered the transactional amount to $600. No big deal.
There is an initiative to return the Code to pre-amendment requirements, but the presentation is pretty recent and most likely will not effect this year's tax requirements. So use the 1099-K form to your and your accountant's advantage when filing your small business taxes this year.
*This post was inspired by the title to an article published online by Entrepreneur Magazine.