I can't tell you how often I hear my "older-school" counterparts tell me that their clients aren't using the Internet ... in any way. This includes portals, social media and, specifically, e-commerce (i.e., eBay and other online sales platforms). But I'm here to tell you this misconception is going to cause many professionals some serious issues once all the 1099-Ks start showing up.

I'm guessing many are asking right about now, "What is a 1099-K?" Not to beat a dead horse, but it's a form that may just cause its fair share of headaches if you have no idea what to do with it.

To help out, here's the background: Buried in the Housing Assistance Tax Act of 2008 is a law that requires companies that process credit cards to issue a 1099-K to each business that receives funds from those transactions. For example, if a client sells products on eBay, they will receive a 1099-K. The law also stipulates that anyone who sells on a site like eBay or Amazon will receive a 1099-K if gross sales are greater than $20,000 or there are more than 200 transactions. For the record, this also includes those with PayPal accounts. You better believe that more of your clients are selling on these Internet sites than you think.

Electronic commerce, also known as e-commerce, refers to the buying and selling of products or services over online systems. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage - and that includes your clients. Knowing this, the time has come for accountants to get in the e-commerce game. To be clear, I'm not advocating that accountants start selling via the Internet, but simply educate themselves on the process - before getting bombarded with 1099-Ks this season.

Here's the other issue: Clients will also be confused by Form 1099-K. I suspect many clients will come to us dumbfounded - having no clue what the form is or its impact on their tax situation. Most will claim to have "sold some stuff online," but beyond that will not understand how to report their income. This leaves the accounting professional with a few choices:

1. Report the income that was stated on the Form 1099-K.

2. Try to help the client figure out what was sold and the related fees.

3. Take a new and innovative approach and get clients connected to the proper cloud-based accounting system to make easy work of figuring out e-commerce income.

I advocate the third option.

Using an innovative cloud solution makes it easy for clients to get up and running, and easy work of summarizing data and creating reports for net income and related Web site sales fees. Summarizing data can be done within a few minutes to create a profit and loss statement from multiple accounts. The functionality enables clients to match up their 1099-K monthly totals line by line to verify numbers and review the transactions behind those totals. How cool is that?

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