Definition:

• Simplest organizational structure to create
• Owned by one person who manages the business and its finances
• Owner represents himself under a different name to public

Set-up:

• Obtain a federal employer identification number IRS
• File Form SS-4 To find this form go to: www.irs.ustreas.gov

Taxation:

• Considered a pass-through entity: all income/expenses filed on owner’s personal tax return
• Income/expenses reported on Schedule C, Form 1040
• Must make estimated tax payments, see http://www.dor.state.wi.us/html/taxpubs.html
• Net income taxed at owner’s individual tax rate
• If you have employees you must withhold for income tax and social security (FUTA)

TIP: Find out why Nancy Peck decided on Sole Proprietorship for Designing Women.