How to File for Sole Proprietorship

You've decided to start your own business. Congratulations! The easy part is over. If you're planning on keeping things small and simple, a sole proprietorship is the way to go. The amount of paperwork is very low and tax implications are minimal. Here's how to do it!

Instructions

Difficulty: Easy

Things You’ll Need:

• Social Security Number,

How to File For a Sole Proprietorship

1. Before filing anything, a sole proprietor should understand what that title means. Sole proprietor basically means self-employed. You are the business and the business is you. It's the simplest form of tax filing for a business, since there is no separate filings for the business; everything is included in your personal return. Make certain you have a concrete business and marketing plan, which includes investigating any requirements for your town or city to start your business.
2. Although each state has its own requirements, you may need to file with your state's tax department and obtain the necessary information to pay various state taxes (sales and use, etc). This filing usually covers any requirements for paying Social Security Taxes, Unemployment taxes or Workers Compensation. Check with your state's tax department for specific filing information.
3. When tax time comes around, you'll file your taxes similarly to before beginning your business. The only addition to your filing is Schedule C, available online from the IRS, which delineates your profits and loss specifically related to your business. A link to that form may be found below.

Tips & Warnings

• With any business venture, it's advisable to contact legal counsel and an accountant to assist you with starting your business. Contracts and tax laws can be tricky, so it's best to contract experts to help in those arenas.