@LadyNeptune
10 Years25,000+ Posts
1099 and deductibles
Yes. That's my job. You don't need a business license to take deductions. Just file your taxes as a sole proprietor.
I'm guessing that he advised you to get the business license so you can make purchases under your business name.
I'm in NY so I am speaking for federal taxes and NY state.
Posted by feby
you mean to register an LLC for yourself with your state? In NJ I believe you need to be an llc etc in order to claim independent contractor...
I like LLC the best. He said I also have the option of doing a private or corporation. Do you happen to know the advantages/disadvantages between these options?
I wouldn't recommend incorporating unless you are making millions. An LLC is a great way to keep your business separate from your personal assets. For example, if someone sues your business, they can't touch your house.
A single owner LLC can also elect to file a schedule c so your taxes can still be simple.
You still have to pay taxes on your profits including fica.
Posted by Deedee86
Yes. That's my job. You don't need a business license to take deductions. Just file your taxes as a sole proprietor.I'm guessing that he advised you to get the business license so you can make purchases under your business name.
Yes he advised me to open a bank account under my buisness name so that electronically all purchases/proof are in one place.
Personally, I just run my business as a sole proprietorship but I'm considering opening a franchise location in another city next year. If I do that, I will probably file an LLC
He said right now I can only deduct around 1/3rd of my rent but under a registered buisness I could deduct 50% +.
Posted by LadyNeptune
Posted by Deedee86
Yes. That's my job. You don't need a business license to take deductions. Just file your taxes as a sole proprietor.I'm guessing that he advised you to get the business license so you can make purchases under your business name.
Yes he advised me to open a bank account under my buisness name so that electronically all purchases are in one place.
click to expand
It makes sense but it's not necessary.
If I earn over 120k I'll owe the city $ $ $ , but as long as it's under that amount there's no charge/fees
Posted by LadyNeptune
He said right now I can only deduct around 1/3rd of my rent but under a registered buisness I could deduct 50% +.
You would have to divide business and personal time and deduct the percentage.
Home office is based on square footage, not time.
Posted by Deedee86
Posted by LadyNeptune
He said right now I can only deduct around 1/3rd of my rent but under a registered buisness I could deduct 50% +.
You would have to divide business and personal time and deduct the percentage.
Home office is based on square footage, not time.
click to expand
That's good to know as I'm in the process of looking to move. So more sf more better.
Posted by feby
you mean to register an LLC for yourself with your state? In NJ I believe you need to be an llc etc in order to claim independent contractor...
Yes, exactly. He's advising me to get that independent contractor status.
Posted by Deedee86
I'm in NY so I am speaking for federal taxes and NY state.
I'm in Los Angeles
Posted by feby
Posted by LadyNeptune
Posted by feby
you mean to register an LLC for yourself with your state? In NJ I believe you need to be an llc etc in order to claim independent contractor...
I like LLC the best. He said I also have the option of doing a private or corporation. Do you happen to know the advantages/disadvantages between these options?
I have done an LLC in the past and currently have one for my side business. It's the way I would proceed because I don't want to be liable.
click to expand
My sister has an LLC and so I'm somewhat familiar as she's explained it to me. Not quite sure what the differences are between private and corporation and LLC.
Posted by LadyNeptune
Posted by Deedee86
I'm in NY so I am speaking for federal taxes and NY state.
I'm in Los Angeles
click to expand
Independent contractor is anyone that gets paid with 1099's
Employers are the ones that have to prove employee or contractor because a lot of them try to get out of paying comp
Posted by Deedee86
Posted by LadyNeptune
Posted by Deedee86
I'm in NY so I am speaking for federal taxes and NY state.
I'm in Los Angeles
Independent contractor is anyone that gets paid with 1099's
Employers are the ones that have to prove employee or contractor because a lot of them try to get out of paying comp
click to expand
So is it more to the employers benifit to have the employee prove that independent contractor status?
Cause this advice I got was from our accountant at work...
Posted by LadyNeptune
Posted by Deedee86
Posted by LadyNeptune
Posted by Deedee86
I'm in NY so I am speaking for federal taxes and NY state.
I'm in Los Angeles
Independent contractor is anyone that gets paid with 1099's
Employers are the ones that have to prove employee or contractor because a lot of them try to get out of paying comp
So is it more to the employers benifit to have the employee prove that independent contractor status?
click to expand
If you are an employee the employer has to pay half your fica taxes plus unemployment and comp. They benefit by hiring you as an independent contractor because it saves them that expense. A lot of large companies get audited and have to prove they are not actually employees. There are some rules.
Posted by Deedee86
Posted by LadyNeptune
Posted by Deedee86
Posted by LadyNeptune
Posted by Deedee86
I'm in NY so I am speaking for federal taxes and NY state.
I'm in Los Angeles
Independent contractor is anyone that gets paid with 1099's
Employers are the ones that have to prove employee or contractor because a lot of them try to get out of paying comp
So is it more to the employers benifit to have the employee prove that independent contractor status?
If you are an employee the employer has to pay half your fica taxes plus unemployment and comp. They benefit by hiring you as an independent contractor because it saves them that expense. A lot of large companies get audited and have to prove they are not actually employees. There are some rules.
click to expand
Interesting.
So right now my employer is paying me $ 2500 through the payroll as my salary, the rest is on the 1099. Does this change any of what you explained above?
Btw we are a tiny company. There's only 4 people.
This guide is pretty much the same in every state.
If the company 1099's you, they have classified you as an independent contractor.
http://www.nfib.com/Portals/0/PDF/AllUsers/legal/guides/independent-contractors-guide-nfib.pdf
I see some companies pay reimbursements and bonuses on 1099 because it was separate from their actual job.
Did this help you understand your situation?
dxpnet has hosted real conversations like this since 2000. If you value independent communities, you can support the site below.
Every contribution helps keep dxpnet independent and ad-light.
Join the Conversation. Explore Yourself. Connect with Others.
Discover insights, swap stories, and find people. dxpnet is where experiences turn into understanding.
Create Your Free Account →
Because the majority of my income is on a 1099 my accountant is encouraging me to get a buisness lisense in order to be able to claim more deductibles on my taxes.
Does anyone have experience with this?