Sole proprietorship taxes could be your biggest cost. Our all-in-one financial solution is designed legally to save you on taxes.
Maximize your savings on sole proprietorship taxes
We may legally save $10,000 or more on sole proprietorship taxes if your net earnings are 50K or more.
Cut down on taxes every year
- Reduce self-employment taxes
- Benefit from legit tax deductions
- Tax-deductible retirement plans
Enjoy a sense of security and serenity
- Estimate your taxes
- Stress-free tax season
- Monitor your spending
Prevent unpleasant surprises
- Avoid costly audits
- Stay in legal compliance
- Protect your assets
Trusted by over 650 small business owners and self employed
How it works
We make S-Corp save you on taxes
We can transfer your sole proprietorship to an S Corporation. You enjoy potential savings on both self-employment and income taxes. We’ll handle all the necessary tasks and responsibilities involved.
We offer clear and straightforward pricing plans for sole proprietors. Make your sole proprietorship taxes less taxing.
Why work with NumberSquad?
Our one-stop accounting solution is designed legally to reduce taxes for sole proprietors. You focus on what you do best, and we’ll take care of all the work.
Your Dedicated Team
A team of tax experts, bookkeeping, and payroll specialists will handle every aspect of the work. We are open year-round.
Save time and money
One-stop finance shop saves you time and money. Getting them as a separate service could cost you twice our plan.
Easy and convenient
Your tax saving plan includes all the steps and tools; tax planning, software, tax professional, bookkeeper, and payroll service.
How is a sole proprietorship taxed on the business?
Starting a business as a sole proprietorship could sound easy. Is it the best way to pay taxes?
What is self-employment tax?
If you have a sole proprietorship business, you must pay self-employment tax. This tax covers your Social Security and Medicare contributions, equal to 15.3% of your net income. The rate is 12.4% for Social Security and 2.9% for Medicare.
Sole proprietorship income tax
As a sole proprietor pays income tax on the profits, you earn from the business. The income tax is based on the owner's tax bracket and the taxable income, which is calculated by subtracting your deductible expenses from your business revenue.
Filing sole proprietorship taxes
Report your sole proprietorship business income and expenses on your 1040 personal tax return under Schedule C and pay both self-employment and income tax. You may also need to pay quarterly federal and state estimated taxes.
Why S Corp instead of the Sole prop?
S corporation saves on self-employment taxes for sole proprietors. Sole proprietors may also benefit from qualifying more deductions and legal protection by transferring their business structure to S corp.Learn more about S corp
How to make your business an S Corporation?
Register LLC or corporation and open a business bank account. Second, start operating your sole proprietorship business under that entity. Make election to S corporation by filing IRS form 2553.More about IRS form 2553
Tax saving strategies for a sole proprietorship business
Sole proprietorship businesses making net earnings of 50K or more may save substantial tax by implementing the following steps.
Right business structure
Frequently asked questions
Sole proprietorship vs. S corp
S corporation may reduce self-employment taxes and provide more qualified tax deductions. A sole proprietorship business is easy to set up but pays self-employment taxes. S corp may demand more paperwork but provide legal protection. Owners of an S corporation should receive officer compensation (w-2) as payroll. S corporations require incorporation or registering an LLC and S corp election.
Sole proprietorship vs. Single-member LLC
Sole proprietorship businesses may pay higher taxes and have no legal protection. Single-member LLC provides the owner with asset protection but does not save taxes unless elected as an S corporation. Net profits from a Sole proprietorship business and Single-member LLC are subject to self-employment tax and are reported in the owner’s personal income tax.
Sole proprietorship vs. C Corporation
Income from a sole proprietorship business is pass-through to the owner’s personal income tax but subject to self-employment tax. A corporation (c corp) is a separate legal entity that provides legal protection to the shareholder’s personal assets. However, there is double taxation on the corporation’s income. A sole proprietorship is generally suitable for side hustles, small-scale operations, and temporary businesses. C corporation is generally an excellent business structure for less profitable asset-accumulating businesses and start-ups expected to raise money and grow fast to go public.
How to calculate self-employment tax?
Self-employment tax calculator:
Multiply your net earnings by 15.3%. For example, if your net earnings are 100K, your self-employment tax is $15,300.
Self-employment tax includes 6.2% Social Security tax as an employee, 1.45% Medicare tax as an employee, 6.2% Social Security tax as an employer and 1.45% Medicare tax as an employer. 6.2% +1.45% +6.2% +1.45% = 15.30%.
Only the first $$160,200 of earnings is subject to the Social Security portion for the 2023 tax year.