Jim Henderson wrote:
> I know.  My point is that the tax you collect and pay on "stuff" that 
> people buy from you in the quantities you are talking about is sales 
> tax.  10,000 customer *buying* $20 of stuff from you requires that you 
> pay sales tax, not income tax.

So, if you make a living selling stuff at $20 a pop, you don't have to pay 
income tax no matter how much you'd make?

>>> Does *anyone* think the tax laws make sense?  I sure don't.
>> I'm pretty sure the owner of the local gas station pays income tax, even
>> tho he *never* gets a 1099, yes?
> 
> He would pay personal income tax, sure - because his business would 
> generate an 1099 for him.

Not if it's not a corporation. You don't issue a 1099 to yourself from yourself.

>>> Well, like I said, I'd have to check with our treasurer.  She said she
>>> "got it sorted out with the state", so I assume the state issued the
>>> certificate, and the feds accept that.
>> That's possible, but the designation as a 503(c) organization is an IRS
>> thing.
> 
> Yes, that makes sense. But that doesn't necessarily mean the feds get 
> involved when one is created.

Not necessarily, but they do. :-) It's a federal law that allows you to not 
pay income tax on your corporation or organization. I'm not sure why you 
wouldn't think the feds are involved in at least some sense.


>>>>>> Did you take them as an individual, or a corporation, or what?
>>>>> Individual.
>>>> Well, a corporation has to report everything, even if they don't get a
>>>> 1099.
>>> Yes, but we were talking about individual income tax?
>> Yes.
> 
> So I'm not clear as to how we're getting them conflated.

Because an individual can't be a non-profit organization?

> If that's your job, then you *should* be working for a "company" entity, 
> even if it's a sole proprietorship and you're the only employee. 

It doesn't work that way. If you're a sole proprietor, you don't have a 
separate EIN for the business.

> That 
> way if the business tanks, it's the business' finances that are hosed and 
> not your personal when you file for bankruptcy.

That would be a corporation.

> So you - as the business - are responsible (as I understand it) for 
> reporting the business' income as an entity (quarterly as I understand 
> it) and then as an individual you are responsible for reporting your 
> salary from your business (and the business is responsible for reporting 
> that as well and dealing with withholdings and such).

That would be a corporation.

> I know a few folks who are independent consultants, and they all seem to 
> have incorporated a business for this purpose, as well as paying an 
> accountant to help them keep their books.

Yes. That would be a corporation. Not a sole proprietorship.

> Even as an advance, it was taxable income unless it was used to cover 
> business expenses - which in my case it was.  I probably could have made 
> it much simpler by incorporating myself, but for one book that seemed 
> like overkill.

Yes.

>>> Now I'll have to find the form.   It may be that I'm just remembering
>>> the boxes saying "0" for what was owed on it.
>> 1099's don't have a "how much you owe" box on them. Just google for
>> "form 1099" and suck it down off the IRS website.
> 
> Hmm, I might be thinking of box 4, which I see is the amount withheld.

Right, which is 0 unless you're getting backup withholding.

-- 
   Darren New, San Diego CA, USA (PST)
   There's no CD like OCD, there's no CD I knoooow!

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