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#18726 - 12/13/02 04:27 PM 1099
sparky66wv Offline

Registered: 11/17/00
Posts: 2334
Loc: West Virginia
I'm a sole proprietor, licensed and insured, and I give invoices when billing.

Why do some companies send a 1099 form?

Would they have to pay taxes on capital improvement work if they didn't?

These invoices include materials installed, would this cause problems on a 1099? I thought they were for wages only... (?)

This is the first company to want a 1099 filled out in the 3 years I've been in business. Once, one company asked me for my SSI#, but never sent me the 1099...

Told him I was a legitimate business and it wasn't necessary... But I may have been speaking out of my posterior.

What say the business gurus and veteran contractors?



Work Gear for Electricians and the Trades

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Arc Flash Clothing, Gloves, KneePads, Tool Belts, Pouches, Tool Carriers, etc. etc....

#18727 - 12/13/02 04:34 PM Re: 1099
GEC-1 Offline

Registered: 06/06/01
Posts: 32
Loc: Covington, Georgia USA
With a 1099, the company can write off the entire ammount that they pay you, thus reducing thier taxes. As for the materials, they have no idea of the cost of the materials. If you mark-up your materials, this too must have taxes paid on it. On the other side, when you get the 1099, it shows the sales you made with the company for the year. Then you deduct the ammount that you paid on materials, and "WALA" you are paying taxes only on the labor and the mark-up! Hope this helps!

#18728 - 12/13/02 04:41 PM Re: 1099
Electric Eagle Offline

Registered: 04/20/02
Posts: 928
Loc: Alpharetta, GA
Virgil, Unless you are incorporated, they have to give you a 1099 for any work over $599. The companies that don't do it are the ones in the wrong. It is your responsiblity to provide documentation of the material and other expenses(helpers) to deduct. The easiest thing is to incorporate and then the 1099 can go in the circular file, your tax return will be more expensive, but limited liability is worth it IMHO.

#18729 - 12/14/02 06:36 AM Re: 1099
sparky Offline

Registered: 10/18/00
Posts: 5545
a few links here that helped me out....

Incorporating for dummies
NOLO ,includes laws for contractors

#18730 - 12/14/02 06:51 AM Re: 1099
walrus Offline

Registered: 07/25/02
Posts: 671
Loc: Bangor Me. USA
If you are going to Inc., get a lawyer to set it up correctly. And if you are doing it to avoid possible liability, make sure you do all business as the corporation and not as yourself.

#18731 - 12/14/02 05:44 PM Re: 1099
ThinkGood Offline

Registered: 08/07/02
Posts: 1084
Loc: Milwaukee, WI

Not sure if an "LLC" would help in this situation. Either way, Corporation, LLC or whatever, the other folks are on track. Setting them up correctly is not a DIY type of job ;-)

LLC=Limited Liability Company

#18732 - 12/14/02 07:43 PM Re: 1099
caselec Offline

Registered: 04/14/02
Posts: 557
Loc: San Jose, CA

Electric Eagle is correct here. Anytime a business pays $600 or more to another business they must file a 1099 unless the other business is a corporation. The same rule applies to you. If you sub contract out $600 or more worth of work to one subcontractor you must file a 1099 on them or the IRS may disallow the expense and hold you liable for the subcontractors taxes. Most businesses will ask for your tax ID number before you start working for them or before making payments for this reason. Since you now have a helper I assume you have a federal tax ID number to use for payroll. You can give other businesses this number instead of you personal SSN number.

Curt Swartz

#18733 - 12/14/02 10:34 PM Re: 1099
George Offline

Registered: 02/23/02
Posts: 380
virgil ---

Find a good CPA.

They can advise you on what type of business organization you should have for tax and liability reasons.

They can also tell you about 1099s and 1096's (?). The governement gets copies from you also.

Most good CPAs will be glad to talk to you for an hour or so at no charge. (My wife (CPA) and daughter (EA) often go to prospective clients together and spend a couple hours giving free advice.)


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