Sole proprietor ... self-employed: What's the difference?

June,

My husband is a custom painter. He works as a subcontractor and pays self employed taxes, what would make more sense taxwise, sole proprietor or continue as self employed?

Marcia, Morrisville, NC


Marcia,

A sole proprietor is a self-employed.

Self-employed is a description for anyone who works for himself. A sole proprietorship is how the business is set up. A sole proprietorship is the type of business structure.

For instance, if your husband went into business with a friend and they worked together they would both be self employed and their business structure would be a partnership.

If you work for yourself and do nothing about your business structure, you are automatically a sole proprietor. You might want to read this column on my website for more info I am a Business .

If you're a sole proprietor, you do not need to file a separate tax return for the business. It's part of your personal 1040. However, were your husband in business with his friend, the partnership would need to file its own tax return.

Best,
June