Taxation of Sole Proprietorships

Sole proprietorships are taxed at the individual level.   However, since a sole proprietor is not employed by the business, the taxation of sole proprietorship includes two types of taxation: income and self-employment.

The Sole Proprietorship – The Basics

Sole Proprietorship

Of the four business entity types, the sole proprietorship is by far the most flexible and easiest to manage. There are very few drawbacks. In the world of business, the key is to maximize profit with the least amount of risk.

Self-Employment Tax: You Can Stop Staring At Me Now!

Self-Employment Tax

Simply put, this is a tax on your net earnings from your small business operation. If you are unincorporated, you have to pay this tax. This includes those in partnership arrangements, and in any form of Limited Liability Company status. Why don’t corporations pay the tax? Actually they do, it’s just called a different name. 

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