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  • Setting up a 1099

    I'm going to have 1099 income starting in May.I don't even know where to go to set it up. Also do I set up a different bank account for the expenses and the income. What if I have expenses that are relevant before I set up the 1099?
    Thanks for your advice
    Last edited by Peds; 03-14-2020, 10:09 AM. Reason: Words

  • #2
    I'm not clear what you mean by setting up a 1099. As for accounts my understanding is you only need separate accounts if you want the convenience rather than sorting business vs personal expenses. I haven't ever bothered. If in the same year I have deducted business expenses such as start up costs, supplies prior to the actual 1099 income.

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    • #3
      As pointed out, you are not; "setting up a 1099." Form 1099-MISC is how non-employee compensation can be reported to you and the IRS. By default every individual with self-employment income is considered a sole proprietor operating a sole proprietorship business in their own name.

      You do not have to, but you can set up a different "business name". This can be as simple as registering a fictitious name or doing business as (DBA). You can also create an LLC, but in most cases it is unnecessary, provides little to no real benefit and can even be counter productive.

      Since the IRS considers a sole proprietorship no different than the sole proprietor, you can use personal financial accounts for the business. However, I have always believed it is a best practice to have separate business accounts from personal accounts for for business income and expenses.

      IRS Publication 535 is the Business Expense bible. You can deduct all legitimate business expenses in a year against business income for that year. You can also deduct certain startup costs in a prior year you didn't have sufficient business income, in a current year against business income for that year.
      Last edited by spiritrider; 03-14-2020, 04:00 PM.

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