What is a sole proprietorship?
If you're self-employed then you’re a sole proprietor and your business is a sole proprietorship.
- Owned by one person—you don’t have any partners.
- Unincorporated—you haven’t filed any legal forms to incorporate your business.
- No legal distinction between the owner and the business—you are entitled to all the income, but also must pay the bills, including taxes.
A married couple can be considered sole proprietors when they elect on their 1040 to treat their jointly owned and operated business as a qualified joint venture.
Organizations that aren’t sole-proprietorships:
- S Corporation
- Limited Liability Company (LLC), except a single-member LLC that doesn’t elect to be treated as a corporation
When you’re a sole proprietor, you file Form 1040 (Individual Income Tax Return) with a Schedule C to calculate your net profit or loss. Once we determine you have self-employment income, we create your Schedule C and also review the income and expenses associated with your business.