1099 employee need DBA to avoid tax penalties?
I recently began working for a company in NJ as a 1099 consultant. I live in PA and wondering if I need to get a DBA and make quarterly tax payments. I work solely for the NJ company. I want to avoid having to pay any large penalties at the end of the year. Please advise. Thanks!
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You don’t need a dba. That is just an alias because if you are looking up Mom’s Cafe that is owned by Joe Smith, you aren’t going to look up Joe in the yellow pages when you are hungry and if you are Joe Smith, MD, you don’t want an alias.
You don’t need DBA, but you will (or may) have to file estimated income taxes, form 1040-ES, on 4/15, 6/15, 9/15 and the last on 1/15/2011. (Those date may need adjustment for weekends.)
A DBA isn’t required to avoid tax penalties or to make quarterly payments. Quarterly payments are required if your total income plus self employment tax for the year will be over $1000
your dba applies to the community you are operating the business in, if they require a license and you have to have a dba to get the license
you file your 1099 income on a sch C and SE and if you have some idea of your tax liability you will file 1040ES on April 15, June 15, Sept, 5, and Jan. 15 of 2011 on the amount you project will be your liability
You do not need a DBA. You do need to make estimated tax payments, which are not exactly quarterly. For example, there are two payments in the April-June quarter and none in the October-December quarter. See Form 1040-ES for the amounts to pay and the dates.
By the way, there is no such thing as a "1099 employee"
If you think you are, your company is lying to you. At some point they will be audited and have to issue you a W-2, When that happens, you will amend your return to move the income from schedule C to line 7 and the expenses to schedule A. If you have no expenses, your taxes will go down–if you have expenses, you could owe.