I hope you guys aren't getting checks made out to your personal names. In this line of work you have to form a corporation. All of your personal assets such as your home, autos, boats, investments and even savings are at risk if you get sued. They could be used to satisfy any law suits, liability incurred by the business or debt incurred by the biz. If you properly form and maintain a corporation then personal liability protection is extended to the owners (shareholders) of the corporation for any debt or liability incurred by the business. Normally your total liability would be limited to how much you invested in the corporation only.
Forming a Corporation also has tax benefits. You can minimize self-employment taxes and certainly increase the allowable deductions which will lower the taxes you pay on the businesses income. If you can you should also look into structuring a retirement and/or tax deferred savings plan which can give you even more tax benefits.
Having a corporation has all kinds of other benefits that you should consult a lawyer about. I'm sure Chad could name tons of other very good reasons to operate as some kind of corporate entity.
To answer your question though, we report every penny taken in and expended in our returns. It's all in Quickbooks so there really is no need for a 1099. You have to report it otherwise you are really playing Russian Roulette with everything you are working so hard on every day. It's just not worth it.
Thats my .02 anyway
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