Question

Although sole proprietors do not pay any special taxes, as the owner of the business you are also an employee of the business, which requires you to:

A. pay income tax only one time each year.
B. pay self-employment taxes.
C. pay for the right to get an employee identification number.
D. file an income tax return for the business.

Answer 1

As a sole proprietor, you are required to pay self-employment taxes as both the employer and employee.

Step-by-step explanation:

If you are a sole proprietor, as the owner of the business, you are considered an employee. This means that you are required to pay self-employment taxes, which include both the employer and employee portions of Social Security and Medicare taxes. These taxes are calculated based on your net earnings from self-employment.