Now that 2010 is almost over, small businesses need to start preparing for the tax laws that are going to take effect in a few months. The 2001 through 2003 tax cuts have not been renewed and are set to expire. Once those tax cuts expire, small businesses that pay at the individual rate will be the most affected. The maximum marginal rate will increase to almost 40 percent! But tax cuts are not the only problem for small businesses, Yahoo's Business & Finance section reported.

Estate taxes for 2010 was 0 percent, but for 2011 the tax will go to a top rate of 55 percent and a $1 million exemption. Many family owned corporations, which can have a significant amount of assets, do not have cash reserves. This translates into a company, that when passed on to heirs, will not have the funds available to pay the estate taxes, which could be substantial.

The danger lies in the heir having to sell part or all of the business, reduce expenses and possibly staff, which leads to higher job losses. Since the recession is still yielding a unemployment rate of over 9 percent, more job losses are not needed.

The biggest concern and change for the new tax year of 2011, is the requirement of businesses to file IRS Form 1099. This form must be filed for any business to business transaction for good or services that exceeds $600 dollars.

Companies will have to incur the expense of tracking and recording the name, address and taxpayer ID number of each vendor. Large corporations will not have as difficult a time as small business owners. This will, of course, increase the cost of doing business. In a difficult economic downturn, increase in costs are not a easy adjustment for every small business owner.

It is important for business owners to prepare for these changes early so that the impact can absorbed. A good idea would be to make an appointment with your tax or accounting professional, who can review how the changes in tax law can affect your company. The consequences of not considering the new tax laws of 2011 could be catastrophic. There is still time, now in 2010, to prepare. Be smart, and take advantage of it.