Anyone do freelance/ contract work?

[jrsygirl]

If so how do you file taxes? Do you do a quarterly 1099?
Did you file your business with the state and charge a sales/sevice tax instead..?? Just curious as to options! Thanks!

[PG-rated]

My DH does all of his work on a contract basis, but he works regularly with two places. He gets a yearly 1099 from them, and files quarterly estimated tax payments. I believe he's set up as a sole proprietor. Does that help?

[KarenS]

If you're planning on doing this, then you probably need to talk to an accountant in your area to find out what the laws are for your state/city.

If you're working as an independent contractor doing a job for a company (or a few companies sequentially), then you probably don't have to charge sales/use tax. Those companies should send you a 1099 at the end of the year (1099s are annual, not quarterly).

If you're actually selling your services as a business, then you probably need a sales/use tax. If you're selling your services, it's possible that not all of your clients will give you a 1099, so you'll need to track your own income.

Either way, you'll need to file quarterly estimated taxes and pay self-employment tax (social security and medicare) and federal income tax. You should figure that 30% to 40% of your gross income should be put aside for these taxes.

ETA: Disclaimer - I'm not an attorney or an accountant so please don't take my word as gospel. This is what I know from owning my own busienss and working as a contractor. I'm pretty sure it's accurate (I hope it is - it's how I do it) but telling the IRS that "karen says so" probably won't work!

Karen