Sole Proprietorships and Schedule C

Summary

This practice note provides an overview of the advantages and disadvantages of sole proprietorships and how they report income or losses on Schedule C of IRS Form 1040 (Schedule C). The practice note also outlines the client engagement process, the process a tax practitioner should follow when preparing a Schedule C, how to establish a sole proprietorship, current developments for the 2023 and 2024 tax filing seasons, helpful governing practices before the Internal Revenue Service (IRS) under Treasury Department Circular No. 230 (Circular 230), and how best to use credits established for small businesses related to the COVID-19 pandemic.