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Am I a sole proprietor? Why do I need to complete a Schedule C?

You are a sole proprietor if you own your business in its entirety, meaning all losses, profits, and taxes from the business are yours alone. Self-employed individuals, small business owners and even gig workers, such as rideshare drivers, can often be considered sole proprietors. When you are in business for yourself, you will need to complete Schedule C when completing your tax return.

Go to this section in Credit Karma Tax: Business Income

If you received a 1099-MISC with an amount in box 7 for nonemployee compensation, this amount will be included on your Schedule C. If you receive a 1099-MISC with a value in this box it’s because the payer is treating you as an independent contractor, not as an employee (otherwise, you would have received a W2). If you do not actually own a business you can leave the Business Name blank when completing your Schedule C.

If you are unsure whether or not you would be considered a sole proprietor, independent contractor or an employee of the business that provided your 1099-MISC form, the IRS provides resources to help you determine your status at 1099 MISC, Independent Contractors, and Self Employed 1.

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