Do sole proprietors file taxes under subchapter "S" or "C"?

Question

I started my own business and it is quickly growing. I beleive that I am going to have to file the additional income under the business. I understand the differences beteween "C" and "S", but I have no shareholders or staff.

I failed to mention that I am becoming an Incorporation and working under the assumed name with the incorporated title. Still I plan on doing all work on my own with the exception of a consultant and personal assistant - Trading services for payment.

Answer 1

Sole proprietors are not a separate tax entity from the owner. You would not file a corporate tax return (as in S-corporation or C-corporation).

You attach Schedule C and Schedule SE to your individual tax return. Schedule C figures your profit and loss from your business, and Schedule SE figures the SS and Medicare taxes on the net profits of the business.

Figures from Schedule C and Schedule SE transfer to Form 1040 and are combined with your other income to figure your individual income taxes.

Answer 2

The answer of ninasgra... is mostly right. However, unless there is a reason not to do so, filing Schedule C-EZ is simpler than filing Schedule C.

A sole proprietorship is more like an S-corp than a C-corp, in that with a sole proprietorship or an S-corp, you report the profits (or your share of the profits) on your return and the busienss pays no income tax, whereas a C-corp pays its own taxes and its shareholders pay taxes only on the dividends that they receive.

Answer 3

A sole proprietor does not file under sub-chapter S or C. You file schedule C along with Form 1040.

You can be a sole proprietor, partnership or a Corporation (C-corporation or S-corporation). If you form an LLC, you must decide if it is to be treated as a sole proprietor, partnership or a corporation. For federal purpose, an LLC is a disregarded entity.

For a corporation, you must first incorporate (and become xxx Inc.) and file how it should be treated --- C corporation or S corporation.

Answer 4

Neither. If you are a sole proprietorship, not a corporation, you show your business income and expenses in a schedule C filed with your personal 1040 tax return.