Sunday, January 24, 2010

The Sole Proprietor

A sole proprietor is someone who owns an unincorporated business by himself or herself; also known as being self-employed.  You use your social security number, or your EIN (employer identification number), to be recognized and tracked by the IRS.  You may or may not have employees, but you are responsible for your own taxes.

Self-employed individuals file a Schedule C.  Some will receive a 1099-MISC from other individuals for work they have done for others as contract labor, some will generate their own cash flow for work done on their own accord, and many will have both.  Some self-employed individuals will as well be employees and receive a W-2.  These folks will file a 1040 as well as their Schedule C

One very important key to a successful business is record keeping.  A journal, or log, or daily intake and expense registration will prove to be essential to a business.  Many business owners employ a bookkeeper.  Tracking expenses carefully is mandatory for a business.  The more profit, the more tax to be paid.

Depending on the business, there may be some unique expenses, but for most there are the standards : 
  • Advertising
  • Office expense
  • Contract Labor
  • Rents
  • Maintenance & repairs
  • Utilities
  • Telephone
  • Business vehicle expense
  • Tax & license
  • Insurance
  • Wages
  • Supplies
  • Legal & professional fees
These are just a few of the possible expenses.  There are many more. 

Call me to discuss your individual tax situation.  I look forward to being your tax professional.

Wanda E Green

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1 comment:

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