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Q. What is self employment tax?
A. As a sole proprietor, you are generally liable for self-employment tax. If you earn or receive income during the year that is not subject to withholding,
or if you do not have enough income tax withheld from other income such as wages, you may have to pay estimated tax.
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Q. What tax form does a Sole Proprietorships need?
A. Sole Proprietorships report income and expenses on Form 1040 Schedule C.
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Q. What if a Sole Proprietorships loses money?
A. IRS allows Sole Proprietorships to offset their net operating loss against their income like wages from a job or earnings from another business.
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Q. Does Sole Proprietorships have to pay estimated taxes?
A. Sole Proprietorships do not have the option to pay their taxes once a year. They need to pay IRS four times during the year they are called estimated taxes.
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Q. What happens if the owner of a Sole Proprietorships dies?
A. When a Sole Proprietorships owner dies, the IRS says the business dies as well. Sole Proprietorships assets become part of the owner estate.
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Q. I work from home can I get any benefit?
A. If you use part of your home for business, you may be able to deduct expenses for the business use of your home.
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Q. Can I employ my spouse?
A. Yes, if your spouse is your employee, not your partner, you must pay Social Security and Medicare taxes for him or her.
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Q. Can I have my spouse as a partner?
A. Yes, The provision generally permits a qualified joint venture whose only members are a husband and wife filing a joint return not to be treated as a partnership
for Federal tax purposes. A qualified joint venture is a joint venture involving the conduct of a trade or business, if (1) the only members of the joint venture are a
husband and wife, (2) both spouses materially participate in the trade or business, and (3) both spouses elect to have the provision apply.