To ensure the successful delivery of newsletters and updates from Hawkins Ash CPAs, please add to your email's safe sender list.

Tax+Business Alert

February 20, 2024

9 Tax Considerations if You’re Starting a Business as a Sole Proprietor

Hawkins Ash CPAs Internship Program

PODCAST: Uncovering the Hidden Tax Implications of Personal Family Loans

There May Still Be Time to Lower Your 2023 Tax Bill

Facebook  Linkedin  Instagram  Youtube

9 Tax Considerations if You’re Starting a Business as a Sole Proprietor 

When launching a small business, many entrepreneurs start out as sole proprietors. If you’re launching a venture as a sole proprietorship, you need to understand the tax issues involved. Here are nine considerations:

1. You may qualify for the pass-through deduction.

  • To the extent your business generates qualified business income, you’re currently eligible to claim the 20% pass-through deduction, subject to limitations. The deduction is taken “below the line,” meaning it reduces taxable income, rather than being taken “above the line” against your gross income. However, you can take the deduction even if you don’t itemize deductions and instead claim the standard deduction. Be aware that this deduction is only available through 2025, unless Congress acts to extend it.

2. You report income and expenses on Schedule C of Form 1040.

  • The net income will be taxable to you regardless of whether you withdraw cash from the business. Your business expenses are deductible against gross income and not as itemized deductions. If you have losses, they’ll generally be deductible against your other income, subject to special rules related to hobby losses, passive activity losses and losses from activities in which you weren’t “at risk.”

3. You must pay self-employment taxes.

  • For 2024, you pay self-employment tax (Social Security and Medicare) at a 15.3% rate on your net earnings from self-employment up to $168,600, and Medicare tax only at a 2.9% rate on the excess. An additional 0.9% Medicare tax (for a total of 3.8%) is imposed on self-employment income in excess of $250,000 for joint returns, $125,000 for married taxpayers filing separate returns and $200,000 in all other cases. Self-employment tax is imposed in addition to income tax, but you can deduct half of your self-employment tax as an adjustment to income.

4. You generally must make quarterly estimated tax payments.

  • For 2024, these are due April 15, June 17, September 16 and January 15, 2025.

5. You can deduct 100% of your health insurance costs as a business expense.

  • This means your deduction for medical care insurance won’t be subject to the rule that limits medical expense deductions.

6. You may be able to deduct home office expenses.

  • If you work from a home office, perform management or administrative tasks there, or store product samples or inventory at home, you may be entitled to deduct an allocable part of certain expenses, including mortgage interest or rent, insurance, utilities, repairs, maintenance and depreciation. You may also be able to deduct travel expenses from a home office to another work location.

7. You should keep complete records of your income and expenses.

  • Specifically, you should carefully record your expenses in order to claim all the tax breaks to which you’re entitled. Certain expenses, such as automobile, travel, meals, and home office expenses, require extra attention because they’re subject to special recordkeeping rules or deductibility limits.

8. You have more responsibilities if you hire employees.

  • For example, you need to get a taxpayer identification number and withhold and pay over payroll taxes.

9. You should consider establishing a qualified retirement plan.

  • The advantages are that amounts contributed to it are deductible at the time of the contributions and aren’t taken into income until they’re withdrawn. You might consider a SEP plan, which requires minimal paperwork. A SIMPLE plan is also available to sole proprietors and offers tax advantages with fewer restrictions and administrative requirements. If you don’t establish a retirement plan, you may still be able to contribute to an IRA.

Turn to us

Contact us if you want additional information regarding the tax aspects of your business, or if you have questions about reporting or recordkeeping requirements.

Matt Cantlon, CPA

D 507.252.6672


Hawkins Ash CPAs Internship Program

At Hawkins Ash CPAs, we’re passionate about fostering the next generation of public accounting professionals. Accounting college students chosen to participate in our Internship Program receive the full public accounting experience as they work side-by-side with senior staff to provide critical, timely tax and audit services to clients. Our interns receive the training and support needed to get the most out of their time. They enjoy in-office lunches and snacks and other fun, team-building activities.

In many cases, interns who enjoy their internship and want to pursue a career in public accounting are offered the opportunity to return for the next year's internship program or a full-time position as an associate.

Hawkins Ash CPAs is a Top 200 Firm in the nation with ten offices in Wisconsin and Minnesota. We are proud to offer local tax, audit, and accounting services to clients and compete on a national level. We offer big-city career options and experiences close to home. Our offices are in small to mid-sized safe Midwest towns. Our flexible work schedules and growth opportunities allow our team to develop personally and professionally through all stages of life.

Learn More About Our Internship Program

Student On-Campus Events

Our recruiter and accounting professionals will be attending the following college career fairs and on-campus events. At these events, students will grow their network and explore career opportunities. They will be available to answer any questions and help guide students through the application and interview process.

Marquette University

February 20: Virtual Mock Interviews – Lead 3000


February 21: Pop-In Hours

February 22: Business Career Fair


February 28: Small Group Resume Review – Quest II

UW-Green Bay

February 28: Spring Job, Internship & Opportunities Fair

February 28: Key Speaker & Networking Event

UW-La Crosse

March 5: UWL Women In Business Club Event


March 6: UWO 2024 Internship & Career Fair

UW-Stevens Point

March 12: Interview Challenge

Concordia University

March 20: Accounting Career Fair

View All Events


Uncovering the Hidden Tax Implications of Personal Family Loans

Join us on today’s episode of Tax Insights as Jeff dives into an often-overlooked aspect of personal finance: interest rates on personal family loans. Discover why charging interest on such loans is not just a choice, but a legal requirement, and learn how the IRS ensures compliance even within familial transactions.

Listen Now

There May Still Be Time to Lower Your 2023 Tax Bill

Deductible Contributions to Traditional IRA

If you’re preparing to file your 2023 tax return and expecting a tax bill, you may still be able to lower it — or even claim a refund. If you qualify, you can make a deductible contribution to a traditional IRA right up until the original filing deadline, April 15, 2024, and see tax savings on your 2023 return.

Increased Contribution Limits for 2023

For eligible taxpayers, the 2023 contribution limit has increased to $6,500, or $7,500 for taxpayers aged 50 and up. If you’re a small business owner, you can establish and contribute to a Simplified Employee Pension (SEP) plan up to the extended due date of your return. The maximum SEP contribution you can make for 2023 is $66,000.

Determining Eligibility

What determines eligibility? To make a deductible contribution to a traditional IRA, you (and your spouse) must not be active participants in an employer-sponsored retirement plan, unless your 2023 modified adjusted gross income falls within these limits:

  • For single taxpayers covered by a workplace plan, the income phaseout range is $73,000 to $83,000.

  • For a married couple filing jointly, where the spouse making IRA contributions is covered by a workplace plan, the income phaseout range is $116,000 to $136,000. If the spouse making the IRA contributions isn’t covered by a workplace plan but his or her spouse is, the phaseout range is $218,000 to $228,000.

  • For a married individual, filing separately, with you or your spouse covered by a workplace plan, the phaseout range is $0 to $10,000.

Contact us if you want more information about this important topic. We can help you save the maximum tax-advantaged amount for retirement.

Tina Krugler

D 715.384.1974


More Resources from CPA-HQ

Defer a Current Tax Bill with a Like-Kind Exchange

Exploring strategies to defer tax bills on gains from appreciated commercial or investment real estate? A Section 1031 “like-kind” exchange could be the key.

A Company Car is a Valuable Perk But Don’t Forget About Taxes

One of the most appreciated fringe benefits for owners and employees of small businesses is the use of a company car.

2024 Key Tax Fact Sheet

Download our 2024 Key Tax Fact Sheet to ensure you're up to date.

Read More
Read More
Read More
Facebook  Linkedin  Instagram  Youtube