#sole-proprietorship
Sole proprietorship accounting, tax filing, and financial management essentials
A single member LLC is taxed as a disregarded entity by default but creates the legal separation a sole proprietorship lacks. This guide covers formation steps, the three tax election paths (Schedule C, S-corp via Form 2553, C-corp via Form 8832), and the bookkeeping discipline needed to preserve the liability shield.
A sole proprietor netting $100,000 pays roughly $14,130 in self-employment tax that an S corp owner can legally avoid. This guide explains the break-even math, Form 2553 deadlines, reasonable compensation audit triggers, and the annual compliance costs that decide whether the switch actually saves money.
Compare EIN, SSN, and ITIN for your small business. Learn who needs which tax ID, how to apply free with the IRS, and avoid penalty-triggering mistakes.
Self-employed pros can deduct work-related education that maintains or improves current job skills. But classes for a new trade fail IRS Topic 513.
File Schedule C with Form 1040 if you earned $400+ from self-employment. Learn filing thresholds, deductions, record-keeping, and audit red flags for sole
Learn the difference between owner's draw and salary, which method to use based on your business structure, IRS rules for reasonable compensation, and tax optimization strategies to pay yourself the right way.
Learn when and how to change your business entity structure, from sole proprietorship to LLC, LLC to S-Corp, or LLC to C-Corp. Includes income thresholds, step-by-step processes, tax implications, and common mistakes to avoid.
