The Real Estate Encyclopedia
What is Sole Proprietorship?
Category - Professional Development - Become a Real Estate Agent

Sole Proprietorship is the simplest corporate structure, which typically involves just one individual who owns and operates the enterprise. If you intend to work alone, this structure might be the most beneficial for you.

The tax benefits from a Sole Proprietorship are appealing because the expenses and your income from the business are included on your personal income tax return, Form 1040. Your profits and losses are recorded on a form called Schedule C, which is filed with your 1040. The bottom line from your Schedule C is transferred to your Form 1040. This may be attractive because any business losses you may experience are considered against any income you may receive from other sources.

In addition to the Form 1040 and Schedule C, you must also file a Schedule SE. This form calculates how much self-employment tax you owe. In addition to self-employment, you also must report quarterly estimated taxes and make the necessary payments.

Selecting the Sole Proprietorship approach means you are personally responsible for your company’s liabilities. Thus, you place your assets at risk. In addition, banks are reluctant to make loans to Sole Proprietorships.



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Professional Development - Become a Real Estate Agent
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