Need business tax and billing advice?

C

clnfrk

New member
Here's my situation: During the weekdays (Monday-Friday) I work as an independent contractor for a messenger service picking up and delivering mostly documents from various businesses and drive an average of probably somewhere in the neighborhood of 120 miles a day. Since I am not an employee of the company, my bi-weekly paychecks I receive from them are made out to my auto detailing business which I had started before taking on the contract. No taxes are taken out of my paychecks which I guess makes me a 1099 as far as taxes go. Anyone care to enlighten me on the details of exactly how a 1099 works?



Also, when I do details on the weekends most people pay by check. I usually just have them make the check out to me. Is this a good or bad thing? I tell them that if they make the check out to my business, I will need to charge tax on the service. Basically, I want to avoid having to pay an exorbitant amount of tax at the end of the year.
 
I can give you the advice, being owner of a company thats does financing, but talk to your CPA and go over structuring. Sounds like this is your first time being paid 1099. You owes the taxes, their not taken out as in W2 pay. Be careful, I always see so many people that getting paid 1099 first time end up blowing through the money forgetting they will actually owe a chunk load in taxes. Go over write offs with your CPA as well (personal reimbursements, business etc).
 
I fully agree with Surfer. A great CPA is a must have if you dont have one. They are worth far more than you will ever pay them!!!:grinno:



As for checks. If you are deposting them into your business checking account then you need to have invoices to support that money. I never mix business with personal. Keeps things on the straight and narrow that way. :) I guess I just never want to wave any red flags and risk an audit.:hairpull



If you want to keep stuff on the down low then cash transactions is the only way to really do that, and keep it in a safe not your bank account.:hide:



Personally, I report all earnings that way I know I never have to worry about anything.



Just my $.02.............................................C:D
 
The checks from the messenger service would be taxed as business income. Usually the schedule C is for business profits and loss. As for the checks made out to you, that is your business, but I would not broadcast it on a public forum. In Virginia, you collect sales tax on merchandise sales, not services. I am not sure how it works where you are though.
 
Get professional advice. And follow it.

Put away 30% of what they 1099. You'll need it, as you must pay the 7.5% self employment tax.

You do not want to dance with the IRS.

Don't ask how I know...



Jim
 
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