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.