In simple terms, a sole proprietorship refers to a business which is not incorporated and which has only one owner.
The general rule with home office deductions is that the deduction cannot generate a business loss. But there’s an exception to this rule.
When a sole proprietor has an employer identification number (EIN), it would seem to be common sense that the proprietor would put that EIN on the Schedule C for the proprietorship. Not so fast -- especially of the sole proprietorship is a single-member LLC taxed as a sole proprietorship.
I’m encountering more and more sole proprietors who want to form S-corps so they can save on taxes. It’s a good strategy -- if you know what you’re getting into. The problem I encounter with these clients is: almost all of them engage in mystical thinking about the wonders of S-corps.