If you pay an employee you need to get a EIN, withhold taxes
and file quarterly payroll reports. Then give them a W2 at the end of the year.
Or you might have paid them as n independent contractor. Then you give them a 1099Misc or the new 1099NEC just like you are receiving a 1099Misc.
Either way you do not issue yourself a W2 or 1099Misc. You do not pay yourself. Sole proprietors cannot take a withdrawal or salary and include it as an expense on their tax return. As a sole proprietor, you are not an employee of the business. You don't pay yourself or enter a salary or withdrawal for yourself. All the business income and expenses are your personal income and expenses in the first place. You just fill out a Schedule C. The net profit or loss is your income. If you have a net profit of $400 or more on schedule C you will pay SE self employment tax on it in addition to your regular income tax. It's all included on your personal 1040 form.
