Switch types to compare setup, tax returns, and owner paperwork.
Sole Proprietorships
Turn independent work into an organized business. We can help you understand registration needs, set up your books, and prepare for tax time.
What is a Sole Proprietorship?
A sole proprietorship is an unincorporated business with one owner. It generally does not create a separate legal entity or separate your personal liability from the business. You may already be operating as one without a formal entity filing.
Get your business set up.
You may need a trade-name registration, local licenses, tax accounts, or an EIN depending on your activities and location. Starting a sole proprietorship is not the same as forming an LLC. We’ll discuss the setup support your business needs.
Every Clean Accounting plan includes one business registration and an IRS EIN application. Included services depend on your plan and business needs; government filing fees are paid by the client.
How taxes and documents work.
Federal income tax
An individual owner generally reports business income and expenses on Schedule C with Form 1040. Schedule SE generally calculates self-employment tax; estimated payments may also be needed. Farming or rental activities can use different schedules.
Documents received
Customers or payment processors may issue 1099-NEC or 1099-K forms when required. Keep complete income records even if no form arrives.
Documents issued
The business may need to issue W-2s to employees or 1099-NECs for reportable contractor payments. The owner does not receive a W-2 or K-1 merely for taking owner draws.
These are common U.S. federal treatments. State taxes, elections, and your business activities can change the requirements. Records, financial statements, and tax forms each serve a different purpose.
Official resources
LLCs
Get help with business registration, organized books, and a tax setup that reflects how your LLC is owned.
What is an Limited Liability Company (LLC)?
An LLC is a legal business structure formed under state law. Owners are called members. Liability protection depends on state law and circumstances; LLC status does not by itself determine how the business pays federal income tax.
Get your business set up.
Formation usually includes state organization documents, applicable fees, and ownership and management arrangements. An operating agreement can document those arrangements. We can support registration and EIN applications within your plan; state fees are paid separately.
Every Clean Accounting plan includes one business registration and an IRS EIN application. Included services depend on your plan and business needs; government filing fees are paid by the client.
How taxes and documents work.
One individual owner
By default, a single-member LLC is usually disregarded for federal income tax. Its business activity is commonly reported on Schedule C with the owner’s Form 1040; rental or farming activity may use other schedules.
Two or more owners
A domestic multi-member LLC is generally taxed as a partnership by default. It files Form 1065 and provides Schedule K-1 to members. Special rules can apply, including certain spouse-owned businesses.
Corporate tax elections
An eligible LLC can elect corporate taxation. C-Corp treatment generally uses Form 1120; an eligible S-Corp election generally uses Form 1120-S and shareholder K-1s.
Documents issued
Owner documents follow the tax classification: no owner K-1 for a default disregarded single-member LLC, member K-1s for partnership treatment, or shareholder K-1s for S-Corp treatment. Employee W-2s and contractor 1099s may also be required.
These are common U.S. federal treatments. State taxes, elections, and your business activities can change the requirements. Records, financial statements, and tax forms each serve a different purpose.
Official resources
Partnerships
Build a shared business with support for registration, bookkeeping, and partner tax reporting.
What is a Partnership?
A partnership generally involves two or more people carrying on a business and sharing its profits and losses. Legal forms include general and limited partnerships; a multi-member LLC can also be taxed as a partnership.
Get your business set up.
Clarify ownership, responsibilities, profit sharing, and decision-making before launch. Registration and liability depend on the legal structure and state. We can help coordinate the accounting and registration work; an attorney can help with partnership agreements.
Every Clean Accounting plan includes one business registration and an IRS EIN application. Included services depend on your plan and business needs; government filing fees are paid by the client.
How taxes and documents work.
Federal income tax
A partnership generally files Form 1065, an information return. Income and other tax items usually pass through to partners, who report their shares on their own returns. Taxable allocations can differ from cash distributions.
Documents issued to partners
The partnership provides Schedule K-1 (Form 1065) to each partner, showing their allocated income, deductions, credits, and other items. Partners generally are not employees and should not receive W-2s for their work as partners.
Other business documents
W-2s may be required for nonpartner employees, and 1099-NECs may be required for reportable contractor payments. Partner self-employment tax treatment depends on their role and the applicable rules.
These are common U.S. federal treatments. State taxes, elections, and your business activities can change the requirements. Records, financial statements, and tax forms each serve a different purpose.
Official resources
S-Corps
Explore whether S-Corp treatment fits your business—and get help coordinating the setup, books, payroll, and filings.
What is an S Corporation?
S-Corp status is a federal tax election available to qualifying corporations and eligible LLCs. It is not a separate type of state registration. Eligibility rules include limits on shareholders and stock classes.
Get your business set up.
First establish the underlying legal entity, then review eligibility and timing for Form 2553. An existing LLC may be able to elect S-Corp treatment without forming another legal entity. Confirm the scope of election support with our team before proceeding.
Every Clean Accounting plan includes one business registration and an IRS EIN application. Included services depend on your plan and business needs; government filing fees are paid by the client.
How taxes and documents work.
Federal income tax
An S corporation generally files Form 1120-S. Income, deductions, and credits usually pass through to shareholders, who report their shares on their personal returns. Certain taxes may still apply at the entity level.
Documents issued to owners
Each shareholder receives Schedule K-1 (Form 1120-S). A shareholder who also works as an employee may receive a W-2 for wages. A K-1 and a W-2 report different things; one does not replace the other.
Payroll matters
Working shareholder-employees must receive reasonable compensation for their services before nonwage distributions. Payroll adds withholding, deposits, and employment tax filings. Potential tax savings depend on your circumstances and costs.
These are common U.S. federal treatments. State taxes, elections, and your business activities can change the requirements. Records, financial statements, and tax forms each serve a different purpose.