Archive Monthly Archives: January 2011

Web-based software could change the outlook of your business

QuickBooks Online, Intuit’s online version of its small business accounting software, celebrates an entire decade in business this year; and besides its longevity, the company also has some astonishing accomplishments to boot, especially for a web-based software program.

QuickBooks Online infographic

Since QuickBooks launched its online version of the software in 2000, its clients have passed $5 trillion of revenue through QuickBooks Online, logged $1.3 trillion in expenses and processed 155 million invoices – and that’s all been done on web browsers. The business – successfully modeling a growing trend in the technology world known as Software as a Service (SaaS) – is another example of how the business world is rapidly changing to be more mobile, scalable and convenient.

Several months ago I posted a blog post outlining how SaaS works and why so many businesses are jumping on board for this type of product. Today I want to look at why it’s also going to be a feasible product for those in the oil and gas accounting industry in the near future.

If there’s one thing I’ve learned about our clients in the oil and gas industry from working at SherWare, it’s that you’re rarely in your office at predictable times – and for good reason. I doubt many of you in the oil and gas industry would claim to have an “office job” like I currently hold.

Your work is something much more tangible than e-mails, phone conversations and typing on computers all day. You see your work in action every day. It’s quantified by barrels, rigs, pipes, workers, times logged, daytime hours left and payroll checks to sign. It may some days be a 9 to 5 job, but it’s certainly not a job where each day is the same and you can always count on an hour lunch break at noon.

Many of you contact us for support while you’re on the road from a job, between meetings or after our office hours because you work your oil and gas business at night after your leave your office job.

For that reason, it’s not always realistic and convenient to have to deal with your finances and accounting for your ever-changing business when you can sit down at your computer and enter a month’s worth of backlogged invoices.

SaaS changes that. It allows you to access your financials, distributions, division of interest orders and leases from wherever you are. It allows you to change division orders when you remember to, not when you’re sitting down processing a distribution and realize you never made the change in the first place.

SaaS also changes how people interact with software. Instead of dealing with the frustration that often accompanies having to install software on a single computer, network or entire office suite, you simple login to a web site and begin entering data. No more messing with drive locations, which folder you should install into and what directories and data paths actually mean.

You can also forget about data surges, power failures and hard drive crashes. If you no longer have to install and store all of your data on your own computer, its’ always safe on our servers, and a backup of your data will always be available.

For those of you looking at the bottom line, and yes, I’m talking to all you accountants types out there, it means less startup and installation time, more productivity when you need to use your oil and gas accounting software and more time for you to deal with all the other aspects of your business and life that are more important.

A SaaS version of our oil and gas accounting products is an option we’re looking to implement in the future. How it would work for you, if a smart phone compatible version is needed, and what additional features you’d like to see added to the software in this type of version is what we still need to discuss with all of you – our future users.

How do you see it working for your business and how can it be an asset in the future? Leave me a comment or send me a message at [email protected]

Web-based software could change the outlook of your business

QuickBooks Online, Intuit’s online version of its small business accounting software, celebrates an entire decade in business this year; and besides its longevity, the company also has some astonishing accomplishments to boot, especially for a web-based software program.

QuickBooks Online infographic

Since QuickBooks launched its online version of the software in 2000, its clients have passed $5 trillion of revenue through QuickBooks Online, logged $1.3 trillion in expenses and processed 155 million invoices – and that’s all been done on web browsers. The business – successfully modeling a growing trend in the technology world known as Software as a Service (SaaS) – is another example of how the business world is rapidly changing to be more mobile, scalable and convenient.

Several months ago I posted a blog post outlining how SaaS works and why so many businesses are jumping on board for this type of product. Today I want to look at why it’s also going to be a feasible product for those in the oil and gas accounting industry in the near future.

If there’s one thing I’ve learned about our clients in the oil and gas industry from working at SherWare, it’s that you’re rarely in your office at predictable times – and for good reason. I doubt many of you in the oil and gas industry would claim to have an “office job” like I currently hold.

Your work is something much more tangible than e-mails, phone conversations and typing on computers all day. You see your work in action every day. It’s quantified by barrels, rigs, pipes, workers, times logged, daytime hours left and payroll checks to sign. It may some days be a 9 to 5 job, but it’s certainly not a job where each day is the same and you can always count on an hour lunch break at noon.

Many of you contact us for support while you’re on the road from a job, between meetings or after our office hours because you work your oil and gas business at night after your leave your office job.

For that reason, it’s not always realistic and convenient to have to deal with your finances and accounting for your ever-changing business when you can sit down at your computer and enter a month’s worth of backlogged invoices.

SaaS changes that. It allows you to access your financials, distributions, division of interest orders and leases from wherever you are. It allows you to change division orders when you remember to, not when you’re sitting down processing a distribution and realize you never made the change in the first place.

SaaS also changes how people interact with software. Instead of dealing with the frustration that often accompanies having to install software on a single computer, network or entire office suite, you simple login to a web site and begin entering data. No more messing with drive locations, which folder you should install into and what directories and data paths actually mean.

You can also forget about data surges, power failures and hard drive crashes. If you no longer have to install and store all of your data on your own computer, its’ always safe on our servers, and a backup of your data will always be available.

For those of you looking at the bottom line, and yes, I’m talking to all you accountants types out there, it means less startup and installation time, more productivity when you need to use your oil and gas accounting software and more time for you to deal with all the other aspects of your business and life that are more important.

A SaaS version of our oil and gas accounting products is an option we’re looking to implement in the future. How it would work for you, if a smart phone compatible version is needed, and what additional features you’d like to see added to the software in this type of version is what we still need to discuss with all of you – our future users.

How do you see it working for your business and how can it be an asset in the future? Leave me a comment or send me a message at [email protected]

Let’s Face it Friday: Oil & Gas Industry Round Up – Week 3

Let's Face it FridayWelcome to Let’s Face it Friday, where I distribute interesting news articles, opinion pieces, info graphics, quizzes and anything else interesting I’ve collected throughout the week about the oil and gas industry to pass on for you to enjoy over the weekend. Please feel free to share anything you read as well or throw your two cents into the articles I’ve selected.

This was a busy week in the industry – enjoy all the news and happy Friday!

Articles related to domestic production in America and how new policies may affect that reality

1. Citing gas prices, oil industry calls for expanded U.S. oil drilling

2. API: US demand grows, but policies may stymie production

 

Industry reaction to the President’s State of Union Address earlier this week

3. Big Oil: ‘The Administration seems poised to stifle our job-creating industry’

4. La. Reaction a mix of praise, protest

5. US gas industry finds mixed message in Obama’s energy priorities

 

Industry reaction the federal spill report’s value and credibility

6. Federal spill report not credible

7. The oil spill commissioner’s anti-oil bias

 

8. Oil industry finds itself in the President’s and West Coast’s crosshairs – (radio bit) This radio piece looks at how a bill introduced in Congress to permanently ban new oil drilling off the Pacific coast and the President’s call to end oil subsidies were two hits for the oil and gas industry this week and what the industry’s response will be

9. Oil patch shows no signs of slowing down – North Dakota’s oil industry has nearly tripled in size thanks to the state’s recently-found oil patch with indications it will only keep rising

10. Global natural gas demand set to soar – This article sets some interesting specifics into how the gas market will look in the future and what role China will play in boosting it.

11. Exxon: Global gasoline demand to fall over 20 years – Another predictive article that looks at how the energy-per-capita will remain the same or higher in America until 2030, fuel efficiency improvements in the U.S. and Europe will make the gasoline demand drop significantly.

12. Oil & Gas Industry Outlook – January 2011 – This heavily-jargoned articled is one that should only be attempted by those deeply entrenched in the industry’s language and is offers technical insight into the market nationally and globally.

13. Oil & Gas Industry Expert: Hydrocarbons are still leaking out from the reservoir – (Radio bit) – This 2-minute radio bit covers part of an interview with Tom Termotto about BK Lim, a veteran geohazards specialist with 30 years experience in the inudstry’s letter to Congress regarding his concerns about the Gulf of Mexico because of the DeepWater drilling fiasco. For those who are actually involved in this field – what are your thoughts?

14. Permit delays may threaten deepwater gulf future, new study says – How the government’s feet-dragging over issue gulf drilling permits will hurt the economy and Gulf Coast’s drilling future

15. Interior hits back at oil industry over deepwater permits – Related to the article above, this article explains the Interior’s Bureau of Ocean Energy Mangement, Regulation and Enforcement says they haven’t been issuing permits

16. Marcellus Shale ‘key’ to W.Va’s future – Industry leaders say natural gas play could be a bigger boon for the stat than coal has been.

17. EPA posts Frack rules without explanation; oil & gas industry cries foul – A lawyer discovers the EPA’s new rules on fracking the organization made by simply posting it on its website without explanation or notification. How does the new change affect you? Is this something you’ve even been made aware of yet?

18. New capability Development Strategies for Global Oil & Gas – Information on an Oil & Gas Capability Summit looking at how to deal with  growing project work and a lack of highly qualified staff to keep production up and stay safe.

19. Analysis: Texas O&G Production Grows; coal still vital to energy needs – A look at how Texas accounts for more than half of U.S. domestic oil and natural gas production according to a recent study, with coal not far behind.

20. The myth of speculative demand for oil – A slightly sarcastic look at how oil commodities differ from trading stocks and bonds and how that affects what investors take in pocket and how the invest in the future.

21. Oil is the New Gold – How oil is catching the eye of investors again, driving prices up and rallying the stock market a bit.

Obama’s State of Union Address Avoids Touchy Issues Like Oil & Gas

All in all the President’s State of the Union address last night was fairly lackluster and clearly avoided tackling some of the bigger topics that are at the forefront of American’s minds. The unusual co-mingling of Republicans and Democrats throughout the audience made for a much somber mood than in previous State of the Union addresses, although it did cut back on some of the insane amounts of standing ovations and cheers.

State of Union Address responseTo me the speech was so broad that its intent seemed to gloss over the actual state of our Union and just try to say something nice about what the future could be – not the present.

It was amazing to me that he devoted so much time to stating his specific goals for clean energy, while clearly leaving out any reference to what’s going to keep America’s energy running until we reach that magical “one million electric vehicles on the road by 2015.”

While I am in no way a hater of the environment and do think that clean energy has its place in America’s future, President Obama’s description of America’s scientists dreaming up ways to use “sunshine and water to fuel our cars” fell flat and made me chuckle. Can anyone else picture them drawing rainbows at the same time? OK, enough silly daydreams.

President Obama’s pointed challenge to come up with enough bright minds and incentives to get the clean energy sources he so desperately wants attached to his name left no doubt to what he thinks of our oil and gas industry in this country. Here’s what he said last night regarding our industry and some things he didn’t have to say.

“We need to reinvent our energy policy. I offer a challenge to America’s scientists and engineers. If you can assemble teams with the best minds in your fields and focus on the hardest problems of clean energy, we’ll fund the Apollo projects of our time,” President Obama said towards the beginning of his address.

“With enough research and incentives we can break our dependence on oil with bio-fuels. I challenge us to be the first country to have one million electric vehicles on the road by 2015.”

I do find the idea of electric vehicles fascinating, but because of their higher price due to the battery cost and that you can only drive shorter ranges currently without needing to recharge, I’m not as optimistic as the President in his goal. I don’t think Americans will adopt the electric car with open arms, no matter how devoted they are to protecting the environment, until our economy is fully recovered and rising again – which I don’t see necessarily happening in four years.

The country is going to have a much harder time than the President anticipates breaking from their love of gasoline-fueled vehicles. Even with more car manufacturers in America adopting plans for electric vehicles, modest estimates don’t even allow for very many cars to actually be produced and sold until late 2012 – giving only two short years to significantly boost production and sway Americans that electric cars are the real deal.

President Obama then went on to discuss how to pay for these great incentives he would be coming up with for America’s best and brightest: “We will pay for it by asking Congress to eliminate the billions of taxpayer’s dollars we are giving to the oil companies. In case you haven’t noticed, they are doing just fine without our help.”

I understand the President wanting to cut back spending somewhere and needing an easy target such as the oil and gas industry. What I don’t think he realizes he is doing, or perhaps it is intentional because he clearly doesn’t care much for our industry, is that by putting a target on the large oil and gas companies’ backs such as Exxon, BP, etc. that take in billions of dollars in revenue, he’s also lumping all the other oil and gas companies across the country – large and small – into the same group thus hindering their ability to prosper by cutting funding and creating regulation after regulation with less than stellar committee choices.

Whether you love the oil and gas industry or not, it is still a driving force in this country’s economy and it is going to remain that way for awhile – no matter how hard the government tries to regulate and slow it down.

Here is how the President ended his bit on energy in America: “Instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s. Let’s set a new goal that by 2035, 80 percent of America’s electricity will come from clean energy sources.

“Some people like wind, solar, nuclear energy. Some like clean coal and natural gas. I say we need them all and we need Republicans and Democrats to work together to make it happen.”

From this statement I gathered that the President has no intentions of increasing production of oil domestically in order to reduce our foreign dependency – like some in the industry were hoping he’d address last night.

Indeed it seems that this President is hell-bent on clean energy and clean energy only, no matter what the cost to Americans may be.

I clearly wasn’t impressed with the speech last night and am interested in how his slightly ridiculous goals in all areas pan out. What are your thoughts? Am I wrong? Let me know what you thought after watching the State of the Union address last night.

Easiest tax solution ever: File taxes on your iPhone

As companies across America are frantically trying to pull together W-2s to mail out in the next week or so (except for you procrastinators who will choose to defer the process until a week from now and consider getting that extension again), here’s a proposition to consider: File your taxes from your phone.

Snap Tax AppHas this thought blown your mind yet? Intuit, yes the same company that owns QuickBooks and TurboTax, has released a new iPhone app meant to rock, and likely simplify, your stress-laden tax season. The app, which you can pick up from Apple’s app store here, is free to download. Users only have to pay $14.99 upon completion when they are ready to e-file their state and federal taxes, which is actually cheaper than using Turbo Tax’s free online tax product, as state filings typically cost about $36 online.

The caveat of the app is that it is only for simple tax returns: Those with annual income of less than $80K for individuals or less than $100K for married couples, you can’t have any dependents and you can’t have any home or real estate ownership.

I’m sure tax accountants across the globe are shuddering as I write this, but I can’t help but be awed. In a world where convenience and speed is EVERYTHING, this app just screams amazing. To file your taxes you simply take a photo with your iPhone of your W-2 form. The app scans the fields and fills them in. Once all the fields are filled in, you can go through each field and manually check for accuracy.

You answer some questions about your habits and preferences, like you would with any other Turbo Tax product, then review, save your file as a PDF to print for your records, pay your $14.99 (price good through March 25 only) and submit your taxes through its e-file system.

How much easier can it get? Released last week, the review already as 4.5 stars from its 140 reviewers – which surprisingly is higher than many other apps I’ve looked at in Apple’s store. As I sadly don’t meet two of the requirement, (less than $100K and no dependents – just kidding! I wish I made more than $100K), I can’t use this awesome app this year.

Anyone tempted to give it a try? Should I remind you say April 12 to see if there are any takers? If you do use this app, please let me know how it worked so I can pass it on.

Let the tax season begin!

Need a new career in the oil and gas industry?

Ever felt like perhaps you weren’t in the right career path? You’re not alone. Career counseling organizations such as LifeTwo and life coaches (who wouldn’t want to hire a life coach?) now predict that people could have as many as three to seven careers in their lifetime and that almost half of working adults today are not completely satisfied with the requirements, lack of flexibility risk and pay grade at their current job.

oil and gas careersAs I’ve discussed in other posts or provided links to in my Let’s Face it Friday Round Up, the oil and gas industry is facing a shortage of people wanting to begin careers in the industry around the world. With environmental groups swaying opinions and governments pushing to abandon oil and gas resources and search for renewable ones, the opportunities shrink for oil and gas industry icons nearing retirement to pass on their experience and wisdom on the industry’s ups and downs to Generation Y adults, like myself.

A petroleum human resources organization based in Canada has created this interesting interactive tool that helps you find a career specifically in the oil and gas industry based on your answers to questions such as do you prefer office or hands-on work, and what types of hours and locations you prefer to work. The career awareness quiz offers insight into these broad fields in the industry: laborers, operators, trades, technicians, technologists, geosciences, engineers, marine and specialty business.

While this in no way should shape your career path, it’s an interesting tool that not only educates people on the many career opportunities that exist in the oil and gas industry, but it is also a useful for those in the industry to learn more about other opportunities in the field.

The career quiz allows you to click on career options and read about the work involved, schooling requirements and other related careers in that field. The website that promotes the tool, careersinoilandgas.com, gives information about the industry, pay benefits, job searching tips and career options featuring videos, case studies and articles.

What are other organizations doing in the industry to promote itself to young adults, looking for a career path? What could your business do to encourage the next generation to participate in our industry?

4 Predictions for Oil & Gas Industry in 2011

Now that most of you goal-setters out there have already labored over your list of goals, predictions, resolutions – whatever you call it for 2011, I thought I’d look at a few of their predictions I read over the weekend in key trends for the oil and gas industry for 2011 written by Bender Consulting.

oil and gas industryThe consulting company offered predictions on natural gas, crude oil, foreign oil superpowers, super majors and shale plays in its post. I’m only going to take a look at a few. Some of the company’s predictions may come as no surprise after reading the news in the last few weeks regarding the oil and gas industry – but some you may find intriguing.

1. Natural gas will become a more dominant energy source in the U.S. as the government pushes for greater energy dependence.

This prediction comes as no surprise as we see the significance of the Marcellus Shale since its rise to fame as a major gas contributor in 2003 when Range Resources – Appalachia, LLC began exploring new drilling and fracturing methods. The shale’s expanse stretches across most of the Appalachian Basin, roughly estimating to cover 600 miles. You can imagine the amount of gas potential this shale holds and I have no doubt that as the industry continues to refine its directional drilling and hydraulic fracturing methods, that this energy source will prove a boon. I’m interested in seeing how much more of a presences natural gas can take in our country’s resources, as a result of the Marcellus Shale demonstrating the vast amounts of gas available in our own country, where we once thought them naught.

2. Natural gas prices will stabilize by late this year but still remain low, as crude oil prices will hover near $100 and possibly require government intervention if it creeps too high to impede the economy’s slow recovery from recession.

In researching natural gas and oil prices, I found this piece by Christopher Head on Americans for Energy Leadership’s blog and he discusses how the prices of gas will be affected by the newly discovered shales. Read his post here. He too, agrees with this prediction, in that natural gas prices will stabilize as a result of the large volume of gas discovered in shales, and that it will keep prices affordable in the U.S. (read : lower for producers, though).

3. Offshore drilling will commence and increase in wake of the Deepwater Horizon’s rig explosion last April.

I don’t even need to include this prediction in the list, as we all know that the offshore drilling, particularly in the Gulf Coast will pick up again. What I’d like to see from this prediction instead is what effect the commission’s report and recommendations to Congress will have on drilling offshore in regards to new regulations, taxes and penalties. To read more on the report released last week check out the post: Commission wrongly blames entire oil and gas industry with Gulf oil spill.

4. Smaller production companies in the shale plays will consolidate this year.

We have many clients that come from smaller to mid-size production company backgrounds. I don’t have much insight into this statement; however this prediction interested me as it could potentially affect many of our clients or potential clients. If this prediction comes true this year, how will it affect the industry. With our economy the way it is, is this a solution that benefits all involved or only the larger companies consolidating the smaller ones?

What other trends have you identified yourself? What do you hope will happen or hope will not happen this year?

Let’s Face it Friday: Oil & Gas Industry Round Up

Let's Face it Friday SeriesIt’s a new year and time for a new series. This year I am implementing Let’s Face it Friday, where I distribute interesting news articles, opinion pieces, info graphics, quizzes and anything else interesting I’ve collected throughout the week about the oil and gas industry to pass on for you to enjoy over the weekend. Please feel free to share anything you read as well or throw your two cents into the articles I’ve selected.

Happy Friday!

News on President Obama’s commission and final report on the gulf oil spill

1. Oil spill panel’s ideas face political, industry resistance

2. Oil spill panel calls for reforms, fees

3. Missed Opportunity: Spill Commission Rejected by Drillers: Opinion article that interestingly points out the fact that oil and gas industry leaders were absent from the commission.

4. Experts disagree on spill report: Perspectives from oil and gas industry experts on the president’s commission and final report.

Texas Railroad Commission Changes

5. Whistle of change blows for agency

6. Texans speak out on changes the Texas Railroad Commission needs to make: Interesting article from Texas that may ruffle a few feathers on some of the state’s residents’ opinion on the Texas RRC.

Other industry news

7. Gulf Oil Industry Overhaul Needed to Protect Sea Turtles: Interesting perspective on changes the industry should make for sea turtles.

8. Trans-Alaska pipeline being restarted, oil to begin flowing again: News about one of the country’s domestic oil supplier’s pipe being restarted after a three-day leak in Alaska.

9. Natural-gas firms increase output in quest for oil:  Insight from a consultant into natural gas prices for the future

10. Chinese-Language Energy Periodical Bridges Oil & Gas Industry to Asian Markets: Canada’s approach to globalize its oil and gas sector in Asia.

Global oil and gas news

(I promise you’ll find them intriguing given the politics involved in the oil and gas industry in America)

11. Oil sector’s career reputation ‘needs to be rebuilt’: Scotland’s oil and gas industry struggles as high-profile environmental campaigns in the country leave engineering graduates seeing no future in the industry and instead turning to renewable alternatives. (interesting read on the effect environmental campaigns has on public perception)

12. Survey highlights the importance of raising oil and gas industry’s profile: Similarly to what Scotland is discovering, the UK’s survey on oil and gas needs in the country raises fears that their profile has been kept low for too long.

Commission wrongly blames entire oil & gas industry with Gulf oil spill

The seven-person commission, established by President Obama last May to look into what went wrong with BP’s Deepwater Horizon oil spill and subsequent explosion, released its final report this week.  The 400-page report is causing a slight stir in the oil and gas industry after the commission essentially placed the blame with the entire oil and gas industry’s apparent lack of regard for safety measures.

“The immediate causes of the Macondo well blowout can be traced to a series of identifiable mistakes made by BP, Halliburton, and Transocean that reveal such systematic failures in risk management that they place in doubt the safety culture of the entire industry,” according to the commission’s report. Read the full report here.

Safety standards in oil and gas industry after gulf oil spillTo be honest, in the past year or two that I’ve been actively reading newsletters and publications published by organizations in our industry, I’ve found myself annoyed at the amount of space that safety regulations, tips and info about seminars take up (simply because I don’t play a role in the industry that requires safety besides watching for carpal tunnel syndrome and eyesight failure from staring at a computer screen all day. I’m not against safety).

Perhaps it has been ratcheted up a notch from all the negative press the industry was given after the gulf oil spill last spring, but I think to the industry as a whole has been attentive to safety standards and unlike the president’s commission found, that it’s not the entire industry as a whole that is negligent.

Here are some questions to consider about the status of safety in our industry:

1. How do you see the industry responding to the commission’s report?

2. What is/or has the industry been doing well in regards to safety?

3. In what areas, whether nationwide or in your area, do operators and producers need to improve?

4. What role should those in the industry play in regulating the safety standards in the future?

Below are some links and information about what the oil and gas industry has been doing in regards to safety. Many organizations do an outstanding job of providing the good information and seminars on how to minimize risk.

Safety in the Oil & Gas Industry Links:

1. Curious about what all the rules are? Check out the regulations and standards for the oil and gas industry, set by the Occupational Safety & Health Administration

2. The American Petroleum Institute’s site related to safety and health of workers and also how it affects the environment (to some extent).

3. Locally, if you belong to the Ohio Oil and Gas Association, you may be interested in finding out about the organization’s safety seminars and manual.

4. Who says safety comes cheap? Colorado’s Sisk & Company’s PetroDocs is a site with more than 650 documents about safety related topics for the oil and gas industry. To gain access, you have to either be a member of the Mountain States Energy Alliance or pay a hefty annual subscription. Depending on your role in the company, this may be a site worth checking out. If nothing else, check out the index with literally hundreds of reports on 45 topics.

5. Want to attend the Oil & Gas Safety Conference? Mark your calendars for 2012 in Arlington. Check out how this year’s conference went from the end of November and what sessions were covered.

6. If you want to manage the safety risk for your business, consider hiring a consulting firm like ABS Consulting. (I’m not necessarily endorsing this firm, just the concept behind what they do to help businesses create safe systems to mitigate risk. You can find a consulting firm in your area.)

For more response about the commission’s findings across the country, check out tomorrow’s Round-Up Post with interesting articles in the news about the oil and gas industry I’ve collected for you to enjoy.

Let me know if you have any good answers to my questions above and of course, stay safe!

1099 requirement threatens small businesses, oil and gas industry

As many businesses are in the throes of 1099 season right now, here’s an interesting piece to keep your eye on this spring that perhaps you missed in the news last fall when it sprung up amid all the political hubbub and recession drama of November 2010.

1099 requirement threatens small businessesTucked away in President Obama’s Patient Protection and Affordable Care Act (read: The Health Care Bill everyone’s still buzzing about) was an expanded 1099 reporting requirement that will smother small businesses and strangely, affect the oil and gas industry if it’s successfully repealed.

The provision, which is scheduled to take effect in 2012 and was written into the health care bill despite the fact that it has nothing to do with health care, will require businesses to report to the IRS all purchases from ANY vendor of goods or services worth $600 or more during the calendar year.

The federal government, who initially backed up the requirement by saying it would bring the government $17 billion in additional tax revenue over the next 10 years and increase tax compliance, has since changed its tune since angry small business owners and the organizations they are a part of and support, such as the Small Business Administration and the American Institute of CPAs, have denounced the absurd requirement that will essentially drown businesses, particularly small businesses, with worthless paperwork.

I’m not even a small business owner and I know how much paperwork we would have to track, store and calculate amounts for each year on the larger purchases we make at SherWare, Inc. to keep our hardware and computer systems up-to-date. Imagine having to report to the IRS every time you purchase equipment for new wells you’re exploring, or if you have a trucking business that has to keep track through receipts how much gas they spend for each gas station on cross-country commutes so each of those individual station’s parent company can receive a 1099. It’s chaos just imagining scenarios, and we’re still a year away from implementation.

Multiple times last fall several senators filed amendments to repeal all or part of the 1099 reporting requirement, but none have been successful getting through the Senate yet. Sen. Mike Johanns (R-Neb.) introduced an amendment to repeal the expanded reporting, while an amendment from Sen. Bill Nelson (D-FL) and another from Sen. Max Baucus (D-MT) would repeal the information reporting requirement for all businesses with less than 25 employees and change the threshold for reporting from $600 to $5,000.

Despite having been stalled thus far in the Senate, even President Obama realizes that the provision is out of line. In a press conference in early November he said, “The 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing. It’s probably counterproductive.”

One of the hang-ups the Senate appears to have with killing the provision altogether is agreeing on another place to pull that $17 million in tax revenue from. One such suggestion from the Democrat’s bills to compensate for taking out the 1099 requirement is to repeal tax breaks for the five largest oil companies, such as BP. The tax break currently allows them to deduct 6 percent of their income from oil and gas production from their tax liability. The senators say the repeal would only apply to the largest corporations with more than $1 billion of before-tax income.

As the Senate session gets underway in 2011, it will be interesting to see how this 1099 requirement plays out. How far will the oil and gas industry be pulled into the battle and what does it mean for the industry as a whole?

How will this affect your business? What do you foresee happening in the oil and gas industry as a result? Send me a comment or e-mail at [email protected].