How Does a Sole Proprietorship Pay Income Tax?
How Does a Sole Proprietorship Pay Income Tax?A sole proprietorship is a business entity owned by an individual and identified with that individual. A sole proprietor is often referred to as “self-employed.” The business and the individual are the same, so the liability of the business is borne by the individual.Answer: A sole proprietorship is taxed through the personal tax return of the owner, on Form 1040. The business profit is calculated and presented on Schedule C. To complete the Schedule C, the income and allowable expenses of the business are listed. The net income of loss of the business is entered on Line 12 of the owner’s Form 1040, to be included along with other income/loss of the owner for income tax purposes. The owner also pays
