Keeping Your Best Interests in Mind

Once an individual decides to start their own business, they should become aware of all legal and tax requirements regarding the product or service they will sell/provide. Reviewing our Small Business Overview page is highly suggested.

The following are key items you should be aware of as a sole proprietor from a tax perspective:

• Your profit or loss will be reported on Schedule C; Profit or Loss from Business of form 1040. (Click here to view Schedule C)
  
• Your income will be subject to self-employment tax in which you will pay both the employer and employee portion at a rate of 15.3% and it will also be subject to your normal Income tax rate.
  
• Be sure your business cannot be considered a “hobby” by the IRS. Click here to see more information about distinguishing if your business may be considered a hobby by the IRS.
  
• The tax Year will end on December 31.
  
• The accounting method is by cash only.
  
• Open a separate bank account for your business.
  
• Keep good records.
  
• We highly suggest you create an LLC to protect your personal assets.
  
• Also high suggest you use Quickbooks Self-Employed app