[USER]

I’m about to start a 1099 project that will last a couple of months. What are some things you wish you did when you started on your 1099 journey?

Some basic info:
29 years old in IT/cybersecurity

$250k in Roth IRA, 401k, and brokerage, $50k HYSA as EF.
Currently have remote W2 where I work 1-8 hours a week paying $80k/yr (with expected 5-15% pay raise at the end of this year).

I’ve declined any insurance benefits from this employer but enjoy 401k matching, professional

development reimbursement, and 15 days of PTO per year.
Upcoming remote 1099 is 5-20 hours a week billed at $70/hr. If well executed, there should be more work from this employer and others.

My wife and I live alone in North Carolina. We pay $2700/month for our mortgage, $600/month for HOA, insurance and taxes, and put another $1000/month towards the principle (effectively making our 6.99% 30-year fixed a 15-year mortgage.).

Wife is on last week of W2 ($80k/yr also), will be 1099 ($70/hr also but 20-30 hours a week) for at least the next couple of months.

She is undergoing a career change (from mental health therapy to tech) and will likely be W2 fully 12-18 months from now.

My wife and I are trying to have a kid and expect her to be pregnant in the next 6 months.

May be irrelevant but I think it’s worth including for anyone doing longer period advice.

FIRE number is $1.2m and FI age is 48 y/o.

Here are my questions. No need to reply in order or anything, just reply to whatever you want. Also, general tips are welcomed. I’m sure I missed some.

What can I write off and what can I not? My “office” is around 150-200sqft area with a desk, chair, and file cabinet that I also sleep (non-exclusive). Is it possible to partially write off my home office?

Should I get my own business checking account and credit card ASAP?

I will hold off on forming an LLC until more 1099 work lines up but ChatGPT was saying it would be wise to have a separate business account to track expenses.

For phone, internet, utility, and other wrote offs, what is the “best practice”?

Currently, my wife pays for utilities and internet, and I pay for phone. We split the mortgage and groceries.

I’ve heard some people saying you can “write off” lunches if you are talking about business?

Sounds too good to be true because my wife and I go to lunch 1x-2x during the work week and we usually spend 5-10 minutes talking about work.

What other “creative” write offs are there?

How to find a good CPA? Looking local is probably the easiest but I’m open to online as long as they can file North Carolina taxes.

Can I write off health insurance? I get medical, dental, and vision outside my employer (Tricare and FEDVIP for retired military). While these expenses are small it would be great to write off.

What about professional development? I love certifications and degrees and spend $1k-$5k/year on professional development.

If I could write these off this would be a plus.
What’s the low-down on Solo 401k? I’ve heard there’s some huge pluses.

Is Quickbooks much better than Excel? My day-to-day is in Excel and so I’m pretty comfortable but open to other software if it’s easier for a CPA to read.

Thank you for spending your time reading this. I feel I am well on my FIRE journey and enjoy contributing to this community.

Looking forward to everyone’s comments.

[Janice]

1. Yes, there’s a section on the Schedule C of your tax return that allows for home office deduction

2. You want to avoid intermingling personal with business expenses. When you’re starting out, it’s bound to happen but you’ll make your life easier by using a business card for business expenses.

A separate bank account you use for business is good enough until you decide to open an account under that name

2a. Form an LLC. You’ll be a single member LLC and have protection from liability should someone end up suing you or going after your assets.

As a solopreneur, anything is up for grabs if someone comes after you. Tax return doesn’t change if you form an LLC

3. As I understand it, internet and phone can be partially deductible depending on your situation. Utilities are a rental deal so I’d ignore that. Talk to a tax CPA about your setup

4. This is indeed a creative write off — I’d talk to your CPA about this one since we don’t have full context

5. Several ways to do this but you can start with a consult call and ask questions specific to your goals.

A tax strategist could be helpful later too

6. Haven’t heard of writing off health insurance — that probably depends on how you’re set up as a business but since you’re a solopreneur, this is likely a no-go

7. If it’s related to the service you’re offering, absolutely

8. Too much to put in one bullet point.

I’m sure there’s podcast episodes on this but the cool thing is you can max out your 401k and still contribute to a SEP-IRA/Solo 401k. Best to research the difference to start

9. Just stay organized. If you’re using one business card, one bank account specifically for business — you’ve won half the battle.

Quickbooks isn’t really needed if you have one revenue stream and a low volume of expenses you can track (I can recommend software for this)

Although I don’t do taxes, I am a CPA and work with entrepreneurs. Always happy to help think through situations and move toward your goals

[Shawn]

1. You can write off the space exclusively used for business. That can be part of a room, but those square feet need to be exclusive.

You can do it as a percentage of actual expenses for the home or use the simplified method per square foot.

2. Yes, get a separate account. An LLC is pretty easy to set up but not required. An LLC does not change taxes.

3. Phone and Internet are questionable deductions unless they are used exclusively for business.

Mortgage interest and utilities could be apportioned with the home office if you choose not to use the simplified method.

4. If you are eating with a business associate yes. Don’t get too creative.

This should be occasional, not every meal you eat with your wife for instance. Meals are 50% deductible.

5.

6. Yes, it will not lower your self employment tax but will lower federal and state taxes.

7. If it’s directly related to your line of work, yes.

8. These are great. Do it!!

9. It’s really up to you what program you use. I use Wave instead of QuickBooks because it’s free.

[Chrissy]

I can’t get past the job that pays $80k per year for 1-8 hours of work per week with full benefits.

Am I reading that correctly?

[Cathy]

Have a dedicated checking account and credit card ONLY for business. and NEVER put personal expenses thru that account.

You need some type of accounting system. QB is very good but ensure it’s set up correctly with the chart of account.

Hire someone to set it up. It’ll take less than an hour.

There are tons of videos on how to work in QB but if it’s not correctly set up the reports will look nice but will be completely incorrect.

Excel is NOT an accounting system.

[Author]

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