While preparing my taxes, I came to the startling realization that I might need to be an established business to receive payment through a 1099. Knowing nothing about any of this may very well prove problematic. Everywhere I have turned I have found differing and confusing information about what my course of action should be. It is my hope that as I figure this out the hard way, my situation may provide some guidance to others who find themselves in similar situations.
Since my client decided not to 1099 me this investigation is more a preemptive one. None the less it certainly warrants some thorough looking into. I hope to be hired into a firm soon but if that dream goes unrealized much longer, I will be forced to organize my business strategy in a hurry.
Seeing as I am an unlicensed designer, I have to be extra careful about how I decide to proceed. I know that if I decide to work under any business name I am required to file a DBA, or doing business as, fictitious business name filing. However, if I just use D’anna Olsen, designer, I can skip this process.
If I choose to become a business, I will need to get a license in my home city and possibly any other city I work in. I will also have to file estimated quarterly taxes and pay the full social security and Medicare taxes. Seeing as I don’t work much now this seems overboard. However, I would not like to risk any fines if the government feels I am not reporting as I should, so I will likely initiate these processes before I risk accepting 1099s.
Because I am providing a service rather than a product, I am not responsible for charging sales tax, which alleviates some of the pressure.
As I get more information, I will add to this post but for now I feel I have made great headway in my research.