Impact of 1099 sub-contracting on sole proprietorship taxes.

Forum|Forum|1 year ago
August 28, 2024
1 reply
0 views

I'm a sole proprietor and have a big contract with a company. I want to pull in a fellow contractor (let's call them R) onto this project, and I have the option to either contract (1099) to them myself, or have them sign their own contract with the large company. I'd rather contract to them myself but I was wondering if this leads to more taxes. Would I be able to write off all payments to R as business expenses? and would my personal taxes still go up, since my sole proprietorship GROSS income went up?

dev145

Yes, you will be able to write of any payment you make to R as business expense. Make sure to have him/her fill out form W9 and issue a 1099-NEC if payment is more than $600. See below links.

https://www.irs.gov/forms-pubs/about-form-w-9

https://www.irs.gov/forms-pubs/about-form-1099-nec

Your gross income will go up but your personal taxes are calculated on net income.