USA 1099-MISC Income VS General Income

[etho201]

I run a consulting business (single member LLC) where my clients pay me a fixed amount for support each month. I also offer to purchase computing equipment for my client as a means of offering convenience to my client, but I am not making money on the computing equipment I purchase. Additionally, I paid sales tax for the computing equipment at the time of purchase (it was not wholesale).

So let's say I made $5,000 for my consulting services and I purchased $6,000 of computing equipment for my client. From my client's perspective, they paid me $11,000 for the year and thus, issued me a 1099-MISC. On the 1099-MISC under "Nonemployee compensation" it says $11,000. From my perspective, the $6,000 for the computing equipment was an expense.

What are my options when it comes to reporting taxes? Do I need to enter $11,000 for 1099-MISC Income or can I break it down and enter $5,000 for 1099-MISC Income and $6,000 as general income? What is the best way for me to do this?

 

[pndaccountants]

I listed all my income as 'general income'. Do I subtract the income that was reported on 1099-Misc from general income total? It doesn't make sense to me to report that income under both sections.

 

[Pauljeon]

At the end of the day, you would be netting $5,000 income minus the sales tax if you paid for it in Sch. C, if i'm not mistaken.

 

[Werner Reisacher]

Notwithstanding the tax issue, it is not in your interest to include the sale of products you purchase as consulting services. Have the customer pay directly to the software company or present him the invoice you received and ask him to reimburse you. If you want to mark up the software, add this profit to your consulting charges.
This way, you do not look like having pocketed $ 11K for your benefits. and it will solve all the accounting and Sales
Tax issues.

 

[Lucretia]

I run a consulting business (single member LLC) where my clients pay me a fixed amount for support each month. I also offer to purchase computing equipment for my client as a means of offering convenience to my client, but I am not making money on the computing equipment I purchase. Additionally, I paid sales tax for the computing equipment at the time of purchase (it was not wholesale).

So let's say I made $5,000 for my consulting services and I purchased $6,000 of computing equipment for my client. From my client's perspective, they paid me $11,000 for the year and thus, issued me a 1099-MISC. On the 1099-MISC under "Nonemployee compensation" it says $11,000. From my perspective, the $6,000 for the computing equipment was an expense.

What are my options when it comes to reporting taxes? Do I need to enter $11,000 for 1099-MISC Income or can I break it down and enter $5,000 for 1099-MISC Income and $6,000 as general income? What is the best way for me to do this?

 

[Lucretia]

Ask for a corrected 1099 misc.