Insofar as the 1099 goes, have you ever had any problem with "commingling" those funds with your personal funds? For example, I have a dedicated home office -- it's just an office. I understand that I can deduct some percentage of it from my taxes (vis-a-vis, mortgage), along with computers and what-not. Is that feasible with the 1099 strategy, which seems easier, or does that require a separate corporate identity (i.e., d/b/a)?
You can co-mingle funds. Keep all receipts for "business expenses" - computer, office supplies, eating out, etc. You can deduct office area as a % the whole house mortgage, utilities, etc. - but it gets a bit hairy if the office is an integral part of the house and if/when you sell the house you may have to depreciate the cost-basis according to what you have deducted - may not be worth it considering these potential complications. No need of the Dilbert ID. As long as you are operating on a small scale you don't need to get too formal. I'm not a tax guy but I did just this over a period of several years when I was "consulting".
