More and more business owners are purchasing document shredders then ever before.

Why?... Identity theft for starters.

A new law is going into effect in summer of 2005 which states that if you employ anyone for any reason and have personal information on file regarding that individual for Social Security taxes, credit references, etc., you will have to destroy that information on any document before you toss it into trash.

The law requires you to destroy all paper or computer disks containing personal information which has been derived from a consumer report before it may be discarded.

FACTA (Fair and Accurate Credit Transactions Act) came into being when signed by President Bush on December 4, 2003.

Some of what FACTA allows:

* One free credit report per year per consumer at www.annualcreditreport.com or by calling 877-322-8228. This went into effect across country on September 1, 2003.

* All electronically printed credit card receipts must show only last five digits of a credit card number. This went into effect in December 2003.

*All information collected from a consumer credit report must be destroyed by an employer prior to discarding it. This will become effective June 1, 2005.

*Anyone suspecting identity theft needs to notify only one of three credit-reporting companies in order to set off a nationwide fraud alert. This is effective now.

*Whether your loan is approved or not, mortgage companies have to provide credit score they used to determine loans interest rate. This is effective now.

Does This Apply To My Business?

The 1099-MISC forms must be issued to any person that you have paid at least $600 in rents, services or other income payments. Typically, you should issue form to any independent contractor that you paid $600 to during 2004. For example, if you paid a designer $1,500 to build and maintain a website in 2004 for your business, a 1099-MISC filing would be required. As with practically any IRS filing, there are additional situations that require a 1099 filing [ex: any fishing boat proceeds], so make sure you cover your bases by looking at relevant instructions. Generally, you are not required to report payments to a corporation.

When and What Must Be Filed?

The 1099-MISC form is a multi-layered carbon form, so make sure information you provide appears clearly on all of copies. Once you have filled out form, you must provide Copy B to person that you are reporting to IRS by January 31, 2005. Using our previous example, you would mail Copy B to your website designer before end of January.