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Sole proprietorships are single-owner, unincorporated businesses ranging from home-based businesses to ministry income reported on form 1099. A sole proprietorship is a popular form because it’s straightforward and low cost.

This entity allows you to run a one-man show with little administrative overhead. But, you become personally responsible for ministry debts and other obligations like taxes. A sole proprietorship isn’t treated as a separate business entity from the owner. So, ministry income earned and expenses incurred get passed through to you. You then have to file them on your personal tax return.

A sole proprietorship files their net ministry income or losses on Schedule C or C-EZ. This goes along with Form 1040. The rate of taxation equates to your individual tax rate as opposed to a corporate tax rate. Also, sole proprietors pay self-employment tax on net ministry income.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (763) 425-8778 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com