Questions tagged [sole-proprietorship]

For questions related to sole proprietorship.

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9
votes
1answer
1k views

Sole proprietorship or LLC?

At what point in the life of a small business would you choose to do a LLC over a sole proprietorship? What's the advantage, and what's the cost of doing an LLC?
9
votes
2answers
190 views

Should I use EIN for business once it changes structure from Partnership to Sole Propietorship?

There were two partners in general partnership (50:50 share). One partner left and I took over all his share. Effectively business structure changed from General Partnership to Sole Proprietorship. ...
8
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1answer
10k views

If you run a sole proprietorship, how do you declare the income of the business on your taxes?

Let's say I have a small sole proprietorship with only a bit of income and expenses. I can do up a balance sheet and an income statement at year end. Is that all I need to submit with my taxes, and ...
7
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1answer
1k views

What are FICA taxes for a sole proprietor in the United States

Background I am asking this question as a true sole proprietor that has no other income from a second job or previous employer. As I understand it FICA taxes is an easier way to refer to your Social ...
7
votes
2answers
855 views

What is a good open source Windows finance software

I have played around with GnuCash a little but it doesn't quite meet up to what I am looking for. I currently run QuickBooks and use class tracking to keep a fine line of separation between my ...
7
votes
1answer
506 views

Solo-401k interaction with employer sponsored 401k. Limits of contribution from Schedule C income

I'm quitting a job at the end of this year. I want to start a solo-401k for all my schedule C income and I have a couple of concerns: If my employer were to, for some reason, pay me in 2015 some ...
6
votes
1answer
310 views

Share 1099 payment with another sole proprietor

Jane and Sally are independent contractors who provide education consulting to public school systems. They are separate business entities (both sole proprietors) but they frequently partner together. ...
5
votes
1answer
4k views

What are the tax benefits of a LLC vs a sole proprietorship?

What tax benefits would I receive by changing my sole proprietorship to an LLC? Can the LLC do things like own a company car?
4
votes
2answers
19k views

Why do sole proprietors in India generally use a current account?

I was told that sole proprietors in India use a current account for their business, rather than a savings account, to avoid interest. I don't understand why — if you account for the interest properly ...
4
votes
4answers
399 views

Will my current employer find out if I have a sole proprietarship/corporation?

I am currently employed by a large Canadian corporation. I'm also in the planning stages of bootstrapping my own small company. The two are in unrelated industries, but it could be argued that there ...
4
votes
1answer
5k views

Deducting business expenses paid for by gift card

Let's say I need to purchase a $1000 computer for my sole propietorship / side business. I can pay $1000 and deduct it on my schedule C, but what if I have the opportunity to pay $800 for a $1000 gift ...
4
votes
1answer
324 views

As a Sole Proprietor, will “employer” Solo 401k contributions count towards gross income?

With a Solo 401k, I can contribute up to 25% of my income as "employer contributions." Do these contributions count toward my adjusted gross income? Example I make $100,000 in 2015. I am 55 years ...
4
votes
2answers
362 views

If earning as freelancer, is it better to be a Sole Trader or Limited Company?

I am going to be staring freelancing. Is it better if i set up as a Sole Trader or Limited Company? I wont have many expenses.
4
votes
2answers
3k views

Formation of S-Corp for Gambling Trade

Does anyone have personal experience with incorporating an S-Corporation for the gambling trade? In cases where the gambling activity is consistent and produces sufficient income (versus, say, an ...
4
votes
1answer
156 views

Student freelancer (sole proprietor) and taxes

(I have researched online for more than 12 hours now, and still have some questions. Please don't be hard on me if they are too basic.) I am starting my part-time freelance career now (too late for ...
4
votes
0answers
78 views

Should I create a simultaneous Part-time Sole Proprietorship and Part-time single-member S-Corporation?

I am self-employed and my business has two distinct parts: Engineering and Design - which makes $50k income / year Manufacturing and Sales - which makes $150k income / year I am currently running ...
3
votes
2answers
430 views

What happens to your spouse's sole proprietorship if they die?

In this case, it is a construction company located in the United States. It is owned by one spouse, all bank accounts/credit cards etc. are co-signed by both. However, the business is a sole ...
3
votes
2answers
509 views

I'm self employed. Can I contribute to my previous employers 401k?

I have a 401(k) from my previous job. I left and was unemployed, but now I'm self-employed. Is it possible to contribute to that former 401(k)? Or do I have to create a Solo/Individual 401(k)?
3
votes
3answers
157 views

Can a client pay directly into an IRA/401K?

I have a leftover 401K from my previous employer (in fact I have two of them from two different employers). Currently, I am drawing some income as a sole proprietor of a management consulting company....
3
votes
1answer
65 views

Sole trader GST for small income business in Australia (aside from main salary)

Trying to find out how to handle this case. Next year will be even more fun as I've moved to New Zealand. For tax purposes, I'm a resident in Australia for FY2018. All good. I earned x as salary, ...
3
votes
2answers
167 views

Sole proprietor: How to separate tax payments for home and business

Following the generally accepted standard that one should always keep their business and personal banking accounts separate, how can a sole proprietor make separate tax payments, when the IRS requires ...
3
votes
1answer
426 views

As a sole proprietor can I charge a fee for being paid by check or card

My Background I am a sole proprietor (freelance programmer) and usually receive payment for projects by check. I send an invoice to my clients with a breakdown of my work and payment terms. Because of ...
3
votes
1answer
114 views

Payslips for assistant in the UK

I operate as a sole trader. I have an assistant that I pay on a regular basis. Do I need to provide them with payslips? If so, what information is legally required to be shown on the payslip other ...
3
votes
1answer
88 views

Can a person running two (non-incorporated, sole-proprietor) businesses write off expenses from one and contribute to a solo 401k for the other?

I think this will be the last year I can get away with not using a tax professional, but I'd love to go one more year before I have to. My wife (filing jointly) is currently freelance consulting. Let'...
3
votes
1answer
116 views

I filed for a Sole Proprietor EIN, but made no money. Do I need to file any tax forms?

Do I need to file any tax forms, with no money earned, for a sole proprietor with an EIN? I requested an EIN thinking that I was going to use it, but it has taken longer to get to a point of ...
3
votes
1answer
1k views

How much taxes do corporations have to pay on dividends they receive from other companies?

I am trying to figure out whether it would be beneficial for me to convert my sole-proprietorship to a corporation. In doing my research, I need to figure out how corporations get taxed on dividends ...
2
votes
4answers
296 views

How to keep track of revenue and expenses of a small business that I rarely visit?

I'm a programmer looking to invest some money into opening a very very small restaurant which will be run by my friend (who's a professional restaurant manager) with occasional help from family ...
2
votes
1answer
534 views

Deducting side work sole proprietorship expenses from regular employment earnings?

I have a day-job which gets me a salary. I'm about to start some websites on the side with the intention of making money off advertising. For the time being, I plan to remain an unregistered sole ...
2
votes
3answers
579 views

Do I need to file tax form 1099 misc for my royalties?

I've self-published a book and have sold a few hundred dollars worth of books from the back of my car. (I know I need to pay sales tax on these books.) I have a simple sole proprietorship business in ...
2
votes
1answer
77 views

At what amount of income do you pay less tax with a Limited Company as opposed to sole proprietor?

From my understanding the personal allowance for the 2016-2017 tax year is: £11,000 which I wouldn't pay any tax on. I keep reading that a limited company is a better choice if you have high income. ...
2
votes
1answer
144 views

Why big clients want the contractor to be incorporated before giving them work

Why do banks and other companies in Canada that employ independent contractors to do IT work insist that the contractor be incorporated, as opposed to a sole proprietorship?
2
votes
2answers
37 views

Need access to funds that were earned & taxed prior to establishing LLC

In 2020, I worked as a sole proprietor and kept a 'business' account for my earnings. These were taxed twice - both as personal income and business income. Beginning 2021, I created an LLC (with me ...
2
votes
1answer
783 views

Can I transfer self-employed income into LLC?

Currently my situation is (I'm 18 this is my first year that I'm going to need to deal with taxes) that based off what I've already made so far this year I'm assuming I will make around $50,000 by the ...
2
votes
1answer
66 views

EIN Needed When Filing Form 5500-EZ For Solo 401K

I am a sole proprietor and opened a solo 401k with TD Ameritrade at end of 2018 and then funded it before the tax filing deadline in 2019. I understand that Form 5500 (5500-EZ) needs to be filed ...
2
votes
1answer
110 views

End-of-year purchase deductions

I'm a sole proprietor / contract employee (developer) in Texas (United States) and am planning to make a new hardware purchase. I remember being told that purchases made in the last quarter of the ...
2
votes
1answer
67 views

Disposing of hardware item from current assets, is the reduction in assets posted to equity or special loss account?

I'm disposing of an old laptop that is broken and completely unusable. Let's say it was purchased for $1000 before taxes, already been accounted for in Current Assets since the date of purchase, and ...
2
votes
1answer
128 views

How do I disburse funds that were paid to my personal bank account from a job to another person?

Me and my brother are doing work for a friend. The friend paid me the full amount, and I am supposed to give 50% to my brother. How do I handle this to ensure that I do it correctly and don't get ...
2
votes
1answer
324 views

Initial investment in sole proprietorship

I've sole proprietorship business in Ontario. So far I've been doing web site and custom software development. Then I open up an account for stock trading under same business name. And put some ...
2
votes
1answer
115 views

How to report house used for 100% business?

Self employed as sole proprietor, was using 1/3 of home as home office. Have moved across state line to new house on July 1st, but keeping old house solely to see existing clientele for the ...
2
votes
1answer
282 views

Pros/cons of drawing income in retirement from sole-owner corporation vs. sole-proprietorship?

What happens from a tax perspective at retirement time for the sole-owner/employee of a Corporation versus Sole-Proprietorship? In the case of a Corporation, I assume that the owner pulls money from ...
2
votes
0answers
25 views

Getting paid by my own disregarded entity in Idaho, do I need to file an Idaho personal income tax return

No physical assets nor contracts in Idaho itself. I do not live or physically present in Idaho. So reading through the income tax documents: Idaho source income is income from: Transactions or ...
2
votes
0answers
355 views

Freelancer, Schedule C, Deductions for MEALS in 2018-2025

This question is specific to sole proprietor freelancers who (a) network with other freelancers, (b) sometimes outsource their work to other freelancers but never employ someone, and (c) file a 1040 ...
2
votes
0answers
58 views

Covering all legal/tax bases for sole proprietorship selling apps?

I'm just starting a sole proprietorship for making & selling iPhone/Android apps. I expect buyers all over USA/world. As a traveling performer, my personal location is 50% Florida 50% California, ...
2
votes
0answers
47 views

Am I eligible for a CDC/504 loan as a sole proprietor?

I have a sole proprietor software consultant business, and I am thinking of buying a small office because it would be a better investment than my current office rental. I was looking into loans for ...
1
vote
1answer
96 views

Capital allowance and balancing charges on UK tax return

I'm trying to fill in the 'Capital allowance and balancing charges' page, thing is I'm pretty sure I don't have anything to charge in this yet the website won't accept £0.00 as a valid answer, can ...
1
vote
1answer
175 views

Can running a side business (sole proprietor) at a loss along with a full time employee job help reduce total taxable income?

Let's say someone makes 40k at their w2 employee job. But they want to start a business, so they invest some money into equipment ($8000) the first year so they can actually start their business. Does ...
1
vote
1answer
80 views

Declaring income when self-employed

As described here, I earn extra money (around $7000 per year) from a second job, in which I am running a business as a sole trader. Due to the nature of the work, I am mostly paid in cash, and deposit ...
1
vote
1answer
262 views

Deducting SEP-IRA contributions as a sole proprietor with no employees

Is it possible to deduct SEP-IRA contributions from a Schedule C Form 1040? I was a sole proprietor with no employees. It seems like if I had employees, I would deduct it on line 19, for Pension and ...
1
vote
1answer
180 views

How much can I deduct for my home office?

I'm a sole proprietor with an office in my apartment and I'm confused on how to calculate my deductions. Suppose the office is 300 sq ft. The apartment is 600 sq ft. Rent is $2000 per month. I see I ...
1
vote
1answer
115 views

Calculating Gross from a desired Net

I have a sole proprietorship and I'm helping out a friend. We have an agreement where I told him what I needed to net each month and I can invoice for that. If I need to net $6000 each month, how do ...