Sorting Out the Forms
Most sole proprietors and partners file their income taxes using Form 1040. The business doesn’t have to file any additional forms if it’s owned by a sole proprietor. During the year you’ll have to pay estimated taxes using Form 1040-ES. You can download Publication 505, “Tax Withholding and Estimated Taxes” (www.irs.gov/pub/irs-pdf/p505.pdf
), to learn more about this requirement.
A sole proprietor needs to add Schedule C, “Profit or Loss from Business,” which includes most of the information on the profit and loss (P&L) statement. There are some differences because of various tax breaks available to business owners, especially relating to equipment and vehicle purchases. Instructions for this form can be found in your ...