Hello and thank you for your questions.
1. A solo proprietor is anyone that performed services or sells products for profit that are not registered with the state. As a freelancer you are considered sole proprietorship and you are subject to self-employment taxes.
2. You have the following business types you might consider.
- Limited Liability Company - Single member - You register your LLC to the state. You file form 1040 Schedule C. You have the benefit of Limited liability in case of any legal purposes. You are separate from the LLC and you are not personally liable for any debts or obligations from the LLC. As an owner you need to pay estimated taxes of at leaset 90% of the tax liability to the IRS every quarter and it includes self-employment taxes. Your Self-Employment Tax is 15.3%(12.4% SS + 2.9% Medicare) of your net income.https://turbotax.intuit.com/tax-tips/small-business-taxes/limited-liability-company-taxes/L5TDDlstC
- S-Corp is a corporation that is separate and distinct from its owners. The shareholders have limited liability, including employees. S-corp elect to pass corporate income, losses, deductions, and credits through to the shareholders for federal tax purposes. Meaning the individual would report it through form 1120-S Schedule K1. You make the election through form 2553.
- You can find more information regarding different business entities at Business Structures - https://www.irs.gov/businesses/small-businesses-self-employed/business-structures
3. Yes, if he made more than $1,000.00 of net income he needs to pay self-employment taxes, which would be 15.3%(12.4% SS + 2.9% Medicare) besides the federal income tax that depends on your total taxable income. You can use the Tax Calculator at https://turbotax.intuit.com/tax-tools/.
4. It is alright if your business have losses or even zero net income in some months that is how most business operate. Some months are good and some months are bad. As long as you keep a good bookkeeping records because it will show at the end of the year how profitable or not you were.
I hope this answered your questions. Thank you and have a wonderful day
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