Working from home, should I just 1099 or form a company?

Question

Through some unique circumstances I find myself working from home. The company I was working for told me to 1099 my services to them. My questions is since I live in L.A. county is it in my best interest to go 1099 or should I form a company and do business that way? I really want to know the pluses and minuses of both as far as taxes go. - Thanks for any response -

Answer 1

The 1099 chatter, means you are a sub-contractor to them. If by the books, they can't tell you when to start your work for them, and how long you are to be on the clock. Starting up a business seems to be premature, when all you have to do is keep some records of expenses, and file the Schedule C, as sole proprietor. This is really a gold mine if you can learn the best uses of the Schedule C, as you learn "what else" in your life you can write off as a business expense against the income you will get. The little hassle, is the monthly or quarterly Form 941, with holdings you need to send in. And in Cali, the State taxes you may need to send in monthly or quarterly. You still have a small business with Schedule C, as opposed to L.L.C. or corporation, but you don't need to have an attorney draw up legal papers (Expen$e) until you decide if your business is making lotsa dough.

Answer 2

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Answer 3

As some one mentioned they send you a 1099 for work you billed to them you do not issue a 1099 to people who pay you.

If you where a w-2 employee and are now a self employed person you will notice about a 7% increase in your tax due to the 1/2 the fica and medicare tax your employeer was paying but as a self employed person you get the pleasure of paying both halves.

Your only real choices of entity are sch. C and S-Corp. Could get around some of the employement tax issues with an S-Corp but you would face having to file an tax return.

Whether you start an llc or don't if you get a 1099 from the company it will be taxable on sch. C.

Answer 4

If you are the sole owner of a company, your taxes are exactly the same as if you just work for yourself. You should handle your finances as if the business is a separate entity in either case. NEVER mix personal and business expenses. As bostonianinmo said, 1099 refers to the form the company sends YOU showing they paid you more than $600 in a year. You would send them an invoice aka bill.

Answer 5

It doesn't matter. FYI, you don't "1099 my services" to anyone. The company that pays you will send you a Form 1099 in any year that they pay you $600 or more. It won't matter if you form a company or trade under your own name.

Answer 6

if you create a business you may be liable through LLC laws, if you 1099 your work is neither liable or warranted in addition you can write off everything, cell phones, meals, internet service etc.

Answer 7

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