How Do I File Taxes as a Sole Proprietor?

A sole proprietorship operates as an individual for tax purposes. Sole proprietors pay taxes on business income on their personal tax returns.
All corporations must file a corporate tax return, even if they have no income. An LLC taxed as a corporation must also file a federal income tax return even if it was inactive during the year.
Single-member LLCs report business activity on the owner’s personal tax return. LLCs taxed as sole proprietorships with no business activity don’t have to file a federal business tax return.

You can deduct or amortize start-up expenses once your business is active rather than filing taxes with no income. If you didn’t receive income but were actively engaged in your trade, file taxes and claim your expenses.
If your sole proprietorship has no profit or loss for the full year, you don’t need to file a tax return. However, an LLC with no business activity taxed as a partnership must file a partnership tax return to claim expenses or credits.

A sole proprietorship does not file special state or federal tax forms. Sole proprietors generally only file Schedule C with Form 1040.

An LLC with no business activity that is taxed as a partnership is not required to file a partnership tax return unless there are expenses or credits that the LLC wants to claim. Even if your LLC has no business activity, it is important to understand your LLC tax filing status and whether it is obligated to file a federal income tax return.
If an LLC has elected to be treated as a corporation for tax purposes, it must file a federal income tax return even if the LLC did not engage in any business during the year.