Tax Planning & Preparation for Sole Proprietorship

Sole proprietorships are the most basic business structure in the United States. They’re also the default business structure for individual-owned businesses. If you start a business by yourself and don’t incorporate it, the IRS automatically considers you to be a sole proprietorship.

How are sole proprietorships taxed?

Sole proprietors are taxed as individuals, just like they were before they started the business. They report their income and expenses on their personal tax returns, rather than on a separate business tax return like a corporation would.

One of the biggest differences between doing your taxes as a sole proprietor and doing them as an employee is that you have to report your business’s profits and losses on an extra IRS form called Schedule C.

KEY TAKEAWAYS

  • A sole proprietorship is an unincorporated business with only one owner who pays personal income tax on profits earned.
  • Sole proprietorships are easy to establish and dismantle, due to a lack of government involvement, making them popular with small business owners and contractors.
  • Many sole proprietorships end up getting restructured into an LLC, in sync with the company’s expansion.

Sole proprietors are responsible for paying

Federal income tax.
State income tax, if this applies in your home state.
Self-employment tax.
Federal and state estimated taxes.
Sales tax, if applicable.

Here’s what TaxAccountPro do for you

1) Annual tax obligations
2) Compensation and benefit packages
3) Reorganizations
4) Business termination
5) Business expansion
6) Estate planning
7) Preparing Financial Statements

Benefit of Filing Sole Proprietorship Tax Return

1) Records and audits
2) Self-employment tax
3) Business expenses
4) Health insurance deduction

Why do you need TaxAccountPro Services?

Time Benefit – Allows planning round the clock operations.
Cost-Benefit – Lower cost of operations by 40%.
Staff Benefit – Right Level staff for different requirements.
Business Benefit – Save on Infrastructure and Technology for outsourced staff.

If you need a fast, accurate tax professional to prepare your tax return this year give us a call today or fill out the contact form below.

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