|Sole proprietorship||Income tax||Self-employment tax||Schedule C / Schedule C-EZ||1099-K|
|This is an unincorporated business that has only one owner. If you’re a husband and wife who elect to be treated as one owner, you are also a sole proprietor. Besides sole proprietorships, other common types of business entities are partnerships, limited liability companies (LLC’s), C corporations and S corporations.||This is what keeps the federal government humming. As a sole proprietor, you use Schedule C / C-EZ to calculate your business’ income (or loss), and then incorporate that into Form 1040 to determine your total income tax obligation for the year.||As a sole proprietor, you don’t pay payroll taxes. But that doesn’t mean you’re off the hook! Instead, you must pay self-employment taxes which consists of Social Security and Medicare taxes.||These are the IRS forms which sole proprietors use to report their business income and expenses.||This is a new form required by the IRS as of Tax Year 2011. If you’ve processed at least $20,000 and at least 200 transactions through a payment processor such as PayPal, Google Checkout, Amazon Checkout, and Etsy Direct Checkout in 2012, then you will receive a 1099-K from that processor. The purpose of the 1099-K is to reduce the amount of underreporting of income that the IRS believes happens every year by small businesses.|
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