internet business(es) and taxes

What is the name of your state? New York

I have done some research and am trying to find concrete information about the simplest way of dealing with taxes and the running of a small, part-time internet consultant business (mostly web design and production) as a sole proprietor.

1. Is there a way around filing estimated quarterly tax returns, and instead filing in a single lump-sum return, especially as the business would be making $6000 or less, with gaps some months (maybe even a year) where no business is being transacted at all? Essentially, I'd like to retain the business as an occasional thing, whereby, if I happen to come upon a project I wish to do it's there for me to use, with as little accounting/tax hassles as possible. What's my best bet?

2. According to some sources the minimum amount of revenue required for payment of self-employment taxes is $1000; I've also read $400. Which is it? Does this relate to passed-thru income tax as well? And if under that amount does any tax return need to be filed at all?

3. Should clients be issuing me a 1099 when work is performed? What if they aren't a full-fledged business entity, as yet, such as an artist, photographer, musician, or small, early-stage startup?

I am also interested in possibly creating a network of internet freelancers (with about 4 or 5 members).

1. What would be the simplest, most economical means of doing this - outside of forming an LLC or full-fledged corp.? Form a general partnership with each member as a partner? Having each member act as a subcontractor under a single DBA with one member acting as owner and "employer"?

2. Is it possible (and legal) to set-up a site as a "showcase" for individual members and their skills, using that as a means of getting clients and parcelling out the work to the various members (i.e., as a pseudo-"storefront")?

I'm looking for the most flexible, convenient options.

I know there's quite a bit here, but any help would be appreciated. I've already checked local gov't sites, sba sites, nolo.com, and the like, so I'm looking for some more specific, practical information.

Thanks.

[this has also been posted to the Starting a Business forum]

1. Is there a way around filing estimated quarterly tax returns, and instead filing in a single lump-sum return, especially as the business would be making $6000 or less, with gaps some months (maybe even a year) where no business is being transacted at all? Essentially, I'd like to retain the business as an occasional thing, whereby, if I happen to come upon a project I wish to do it's there for me to use, with as little accounting/tax hassles as possible. What's my best bet?

The simplest thing to do is to have your employer withhold the extra amount needed to pay the tax on the business earning.


2. According to some sources the minimum amount of revenue required for payment of self-employment taxes is $1000; i've also read $400. Which is it? Does this relate to passed-thru income tax as well? And if under that amount does any tax return need to be filed at all?

The rule is that if you end up owing $1,000 or more, you should have sent in estimated tax. If your business earns less than $400, you do not have to pay social security tax (self employment tax) on it.


3. Should clients be issuing me a 1099 when work is performed? What if they aren't a full-fledged business entity, as yet, such as an artist, photographer, musician, or small, early-stage startup?

Yes, they should issue you 1099s. However, you are liable for tax on the earnings even if they do not.


I am also interested in possibly creating a network of internet freelancers (with about 4 or 5 members).

1. What would be the simplest, most economical means of doing this - outside of forming an LLC or full-fledged corp.? Form a general partnership with each member as a partner? Having each member act as a subcontractor under a single DBA with one member acting as owner and "employer"?

Either of your choices will work. However, it would probably be better to form an llc.


2. Is it possible (and legal) to set-up a site as a "showcase" for individual members and their skills, using that as a means of getting clients and parcelling out the work to the various members (i.e., as a pseudo-"storefront")?

There is nothing to prevent your doing that.