Sole Proprietorships

What is a Sole Proprietorship?

A sole proprietorship is an unincorporated business that is owned by one person. It is the simplest form of business organization to start and maintain. The business has no existence apart from you, the owner. Its liabilities are your personal liabilities, and you undertake the risks of the business for all assets owned, whether used in the business or personally owned. You include the income expenses of the business on your own tax return.

Filing Requirements

Attach a separate Schedule C (Profit or Loss From Business) to your state and federal returns to report the profit or loss from each business (except farming) you operate as a sole proprietorship. If you have only one business, you may be able to use Schedule C-EZ, Net Profit From Business.

If you are a sole proprietor of a farming business, use Schedule F (IRS Form 1040), Profit or Loss From Farming, to report your profit or loss.

Helpful Publications for Sole Proprietorships

• Tax Guide for Small Business (IRS Publication 334)
• Farmer's Tax Guide (IRS Publication 225)

Find out more about: Income Taxes for Your Business Type