A business entity is an organization established as a separate entity for the purpose of conducting business. It functions independently of its owners and has its own legal rights and obligations.
A 'Doing Business As' (DBA) is a designation used when an individual or company operates under a name different from its legal, registered name.
Drawings refer to the withdrawal of assets, typically cash or goods, from an unincorporated business by its owner. This concept is essential in differentiating between unincorporated businesses and corporations, and comprehending how owners can access business assets.
A tax term that allows a current deduction for business expenses; contrasted with capital expenditures. An ordinary and necessary business expense of a sole proprietor would appear on Schedule C of Form 1040.
A proprietor is an owner of a property or business. In the context of a company, the owners are referred to as shareholders.
An unincorporated business owned by a single person, where the individual proprietor has rights to all profits and responsibilities for all liabilities. The income is reported on Schedule C of Form 1040 and is subject to self-employment tax.
Self-employed individuals work for themselves, without a formal employer, and include sole proprietors and partners in partnerships. They shoulder all business risks and responsibilities, paying self-employment tax in addition to income tax on their net income.
A sole proprietorship is a business or financial venture that is carried on by a single individual and is not organized as a trust or corporation. The sole owner has unlimited liability and reports income and expenses on Schedule C of Form 1040.
Selection of filing status available for state and federal income taxes, including options for both individuals and businesses, significantly impacting tax obligations.
