No. of Recommendations: 7
My DH is self-employed, and I do the books and the taxes, so I'll take a crack at your questions.

I don't know how to track income from various clients, for tax reporting purposes. I don't know what forms I will need for this. It was a no-brainer when I just had a 1099 from someone else, but this is different.

You don't need to track income from each client. The IRS doesn't care where each chunk comes from. They are only interested in the total, so you only need one income number for them.

Do you have Quicken or MS Money? If not, get it. I use that for our personal finances, and I also use it for DH's business. I have a separate checkbook and credit card for his business, which the IRS does like you to have. But the thing that I did that really helps is that I set up one category for his business with a pile of sub-categories, and the sub-categories match the lines on the Schedule C. So I have categories like materials and supplies, insurance, advertising, etc. And as he does use some sub-contractors, I get their SSN when I write a check to pay them, and then I make a sub-category for each sub-contractor. For the ones that are incorporated, you just lump those into one group as part of wages. But for the ones that are not, if you pay them more than $600 during the year, you need to cut them a 1099, so by getting the SSN upfront, I have all the data I need to be able to do that.

I probably need to open a separate business checking account. I've already got the fictitious name, tax number etc.

My DH does not do business under a dba, so we did not need to get a separate tax number. But you absolutely should have a separate checking account and a separate credit card for business expenses. It really makes your bookkeeping much simpler. Something that I do is to take a set amount as salary every two weeks because that's when I do the books, and I transfer that amount out of the business checking account and into our personal account. I picked the amount based on what I estimate he will make in a year, and I adjust it through the year as needed.

Also, remember that you can put money into a SEP or SIMPLE, but one of them requires that you open it prior to October. I think it's the SIMPLE, but I'm really not sure. You want to look into that because you can save significantly for your retirement and on your taxes. Also, with a SIMPLE, which is what we have for DH, you can match your own contributions as the employer, so you get an extra 3%.

I know I'll need to file quarterly taxes. I don't know how to go about that, either, never having done it before.

You need to file estimated taxes, and they are due on April 15, June 15, Sept 15, and Jan 15, and they must be paid to federal and state, if your state has an income tax like ours does. They're fairly straightforward, and as I overpaid last year, this year I set up a spreadsheet that simulates the 1040, plugged in the approximations, and use that to figure out how much to send in quarterly.

You can get the forms online, but after the first year, the feds and state will actually send them to you. And if you use TurboTax, you can even generate them from that.

If you've been doing this this year, I would at least attempt to figure what you owe in taxes, and send something in for Sept 15 even if you have to guess.

If you have another job where you are an employee and they withhold, you can also adjust your withholding there to take out more in taxes to help offset the estimated taxes.

I wonder if I'll need to become an S corporation or something, but know little about the implications.

We haven't bothered with anything other than a sole propriertorship, but I understand there are advantages to other types of business organizations. Someone else will have to provide more info here.

It is not really that hard to do this, and really, if you have Quicken or some sort of money management software, you can set everything up through there, and it will all be automatic.
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