![]() This is called a “disregarded entity.” Usually these entities are single-member LLCs, but sometimes foreign entities (like an offshore corporation) can be disregarded entities, too. Note: Sometimes you can own a business that is a separate legal entity from yourself, but is treated on your tax return as if it’s a sole proprietorship. (This is in contrast to partnerships and corporations, which are legal entities separate from their owners and thus, predictably, have to file their own tax returns.) It’s a schedule (Schedule C to be precise) that goes inside your 1040. ![]() If you own a sole proprietorship, you report the income from the business on your personal income tax return. Once you understand what a sole proprietorship is, you realize that the way the federal government taxes sole proprietorships makes a lot of sense. If things get bad and your business owes a lot of people a lot of money, a court could order that your personal assets be used to pay back your/your business’ debt. When your business isn’t legally considered a separate thing from yourself, it means that you personally are liable for the business’ debts (because you and the business are one in the same thing). But this concept is actually pretty new, and you should know that you need to file special paperwork with your state’s secretary of state if you want your business to legally be something separate from yourself. We’re so used to the idea of corporations that, to many people, it seems only natural that a business is a separate thing from its owner. This concept can seem a bit odd in this day and age. It’s a business owned by one person, and there is no legal distinction between the person and the business. What is a Sole Proprietorship?Ī sole proprietorship is one of the oldest types of legal entities (the other being a general partnership). To understand why all this is the case, we’ll need to first explain what a sole proprietorship is, if you’re not already familiar. In a nutshell, Intuit’s QuickBooks Self-Employed product is designed for sole proprietorships, and it really only works for sole proprietors (or LLCs taxed as sole proprietorships). Should you use QuickBooks Self-employed? It’s a great question to ask if you run a small business and you’re wondering which version of QuickBooks to use.īut to answer this question, we have to explain just what sort of business QuickBooks Self-Employed is even for. Small Businesses and the Affordable Care Act (Obamacare).Setting Low Salaries for S Corporations.Red Portfolio Black Portfolio FAQ and Download.Preparing Form 3115 for the Tangible Property Regulations.Five Minute Payroll Monograph (2019 Edition).Download Your Free Copy of the Thirteen Word Retirement Plan.
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