Sole Proprietorship... 1099

No problem since you and your business are one and the same. You do, however, have the option of asking your customer to issue you a corrected 1099. In fact, you should do a good job up front explaining to the customer how and when to pay you. For example, when you generate an invoice, clearly state who to write the check out to, and where to send it.

This is called commingling, and it is a really bad idea. If the business gets audited, the audit might stop at the business if everything is in order. But if you commingle, the audit will certainly dive into your personal life.

It is very easy to get a business checking account. Just go to your local bank, and bring a copy of your assumed name filing (unless your business name includes your entire full name). You did legally register & publish that business name, didn't you?

-john-

Thatn's for your reply... Yes I filed this form in the name of my company using this form...

is there any other forms I need for sole proprietorship? I don't believe so.

Thanks for your thoughts/and suggestions and please keep 'em comming. Shhhh

I agree. You should open a different bank account with the name of the business (or your personal name as for a sole proprietorship it makes no difference). So if you do not have an official business name with a federal ID number, I am almost certain you can just open a different personal checking account (I'd open one at a different bank from your personal checking account). Keep all tte business money in the seperate account and pay all business expenses through the account. I feel this is even more important tha using quick books as this would really keep your expenses seperate and you could easily track business expenses come tax time. Although quick books is great to use if you have a lot od expenses but either keep the business account seperate.

I am a young accountant. If anyone with more experience has any comments with what I wrote above, please email me directly snipped-for-privacy@gmail.com as I am looking to develop my knowledge base so that I can start my own practice on the side one day.

Aaron Mallin

BB123 wrote:

I'm not familiar w/IL, but it seems that might just be a tax-related form. Find out from someone what it takes to have a valid "DBA" - doing business as - name for a sole proprietorship. Here in SF you file with the county and publish a notice in the newspaper for four weeks. Taxes are a separate issue - you get a tax certificate from a separate authority.

Point being it's unclear whether that tax form is also a DBA filing or whether it's just a form for tax-oversight purposes. I wouldn't be surprised if you have another step to do. You could check off "Corporation" on that form but of course, that's not the form for creating a corporation.

Definitely open a separate account for your business -- go do it right now! Here in SF you need a copy of your DBA filing, otherwise you can only open an account in your name (which may be fine - it's cheaper at a lot of banks, most charge for business checking but not personal checking. The down-side is your checks will read your name, not a business name).

The 1099 income becomes relevant at tax-prep time. In the tax software I've used, you enter all 1099-MISC income separately, and associate each

1099 with a Schedule C (Schedule C is the one you'll use to figure your sole-pro income). Make sure that you don't double-report those revenues, when you report your sales on Schedule C. If you're tracking total sales and they're $40,000, and $17,000 of that was reported on 1099, you didn't have $57,000 in income...it's $23k, with $17k flowing over from those 1099s. This is mostly a tax-software issue really and it's very easy to avoid with Quickbooks, as long as you have QB set up right...it just spits out a report at year end showing all the things you enter on Schedule C. If you don't have QB specially set up for your biz (chart of accounts, items, etc), it's worth figuring that out or paying someone to do it.

-Tad

[..]

Getting a business license at the city or state level is a separate matter, and can require payment of a revenue-based license fee or tax.

Back to the OP: as a sole proprietor, you and your business are one and the same for all legal and tax purposes. If you keep separate business bank accounts, and you should, it is simply like keeping your money in different pockets, it's still all yours, but you can keep track of it better.

Whether or not any of your clients issue you a 1099-MISC at the end of the year is not your problem (unless they falsely report a larger amount than they paid you, or use the wrong box on the form). You are obligated to report for tax purposes all income you receive whether reported to you on a 1099-MISC or not. Whether they use your SSN or your EIN (which is tied directly back to your SSN) on the form is also irrelevant.

-Mark Bole