Many people who launch small businesses start out as sole proprietors. Here are nine tax rules and considerations involved in operating as that entity.
Nine Tax Rules for Sole Proprietors
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Many people who launch small businesses start out as sole proprietors. Here are nine tax rules and considerations involved in operating as that entity.
Sole Proprietorship What is a sole proprietorship? A sole proprietorship is a pass-through entity for a business with only one owner. Generally, contractors and freelancers choose to operate as a sole proprietorship due to its low setup costs. How is a sole proprietorship taxed? The business entity itself is not taxed; all profits and losses
Depending on your entity type, you’re subject to both income tax and self-employment tax. There may be a way to cut your tax bill by using an S corporation.
New and potential business owners should take care when selecting their business entity. How you and your business will be taxed is wholly dependent on the entity you select.