Hi, my name is Keith Hall. I'm a CPA and I work exclusively with small business owners, just like you. One of the key things you have to decide is what entity form do you want to operate as in your small business. There are lots of options: a sole proprietorship, LLC, partnership, maybe even operate as a corporation. There are certainly pros and cons of all of those, but let's talk about being a sole proprietorship. What are the benefits? What are the detriments of that form of organization? First of all, operating as a sole proprietorship is probably the most common form for most new small businesses. You came up with the idea, you invested in it, and you started the business. And it's really just you in most cases. Operating as a sole proprietorship is going to meet most of your needs. The great news is, it is probably the easiest form of organization as well, and also the cheapest. There's no federal approval process, there's no application process. You don't have to file any forms to become a sole proprietorship. In fact, you don't even have to say it out loud. You get your first client and you are a small business owner and a sole proprietor. There's a couple of tax forms you need to know about if you are a sole proprietor. The income and expenses that you incur in your business will be included on a Schedule C, profit or loss for business. That's also one of the key benefits of that form of organization. And that is, there's no separate tax return. There's only a few more forms that go with your personal tax return. You're going to have that Schedule C. If you have at least $400 of net income on that Schedule...
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Video instructions and help with filling out and completing How Form 2220 Entities
