A sole proprietorship is a business owned by one person with no separate entity; income and expenses go on Schedule C, profit is subject to self-employment tax, and the owner is personally liable for the business.
A single-member LLC is taxed the same way by default. No separate return is required, and the business uses the owner’s Social Security number unless an EIN is obtained.
It is the simplest structure and the one the IRS audits most for unreported income and personal expenses claimed as business. Schedule C.
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Definitions are general information, not legal advice, and may not reflect the most recent changes in law.
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