A Sole Proprietorship is a business owned and run by one person where there’s no legal separation between the owner and the business. This means you automatically become a sole proprietor as soon as you start earning income on your own; the business income and expenses are reported on your individual tax return (Schedule C), where you pay both income tax and self-employment tax. While it’s easy and inexpensive to run, the downside is that you’re personally responsible for all debts and legal liabilities of the business.

A DBA (“Doing Business As”) is not a business entity, but simply a registered business name that allows an individual or company to operate under a name different from their legal name. If your DBA is reporting under your personal name (not operating under a legal entity), then it’s taxed as a sole proprietorship.

A Single Member LLC is a legal entity business owned by one individual. By default, a Single Member LLC is treated as a "disregarded entity," meaning it’s taxed as a Sole Proprietorship and does not file its own separate tax return. Instead, the profits or losses of the business are reported on the member's personal tax return on Schedule C. The primary advantage of an LLC is that it provides limited liability protection to the owner. This means the owner’s personal assets are generally protected from the debts and liabilities of the LLC. A Single Member LLC may change it’s election to other tax structures such as an S Corporation if the if the owner wants to achieve certain tax advantaged goals.

Common Business Activities:

• Independent Contractors (1099-NEC)

• E-Commerce / Retail

• Rental Income

• Freelance

• Personal Trainers / Fitness Instructors

• Event Planners

• Consultants

• Photographers

• Tutors / Educators

• Crafts / Artisans

• Other Side Gigs w/ no legal entity