A sole proprietorship is a business owned and operated by one individual. The owner makes all the decisions and is responsible for running the business. Because the business and owner aren’t separate, the owner is personally responsible for the business’s debts and obligations. The owner should maintain separate business records as well.

Sole proprietors report business income and expenses on their individual tax return.

For more information, check out Publication 334, Tax Guide for Small Business. Visit the Small Business and Self-Employed Tax Center for more resources and guidance on IRS.gov.