Self Contractor Invoicing and Taxes

[contractorconsult]

This year I will be a self contractor (consulting services) and need to send invoices to a foreign company.  Will I just need to fill out a Schedule C next year for income collected?  Any other steps I am missing?

[Carl]

You only need to issue a 1099-MISC to "individuals" that you pay $600 or more in a tax year. You do not issue that form to other businesses.

[contractorconsult]

Thank you for the response. My question was more related to myself. I will be issuing invoices and accepting income from those invoices. How do I report that income?

[VictoriaD75]

To enter your business income and expenses:

• From the Federal menu, click on Income & Expenses
• Expand the menu for Self-Employment
• Click Start/Revisit next to Self-employment income & expenses
• Edit next to the business or Add the business if needed
• Include the 1099-MISC in the income section for your business and add any additional payments received, even if a 1099-MISC is not generated

There are three common tests for deductibility of business expenses:

1. Ordinary and Necessary - The expense must be ordinary and necessary. Generally, this means that the expense is commonly found in the specific business, and is helpful and appropriate in running the business.
2. Business Purpose - Expenses must have a legitimate business purpose to be considered deductible.
3. Reasonableness - The tax law requires that the deductions be reasonable to be deducted.

The resources below are useful for understanding common business deductions.

Taking Business Tax Deductions

What self-employed expenses can I deduct?

Business Use of Vehicles

The Home Office Deduction

IRS Publication 535

[Carl]

This year I will be a self contractor (consulting services) and need to send invoices to a foreign company. Will I just need to fill out a Schedule C next year for income collected?

The simple answer is yes.

Any other steps I am missing?

Nope, not at this time. The fact your customers are foreign really doesn't matter at all or make any difference for anything. You will report all business income received from all sources world-wide on SCH C. Yep, that simple.