Managing Individual Income Tax for Businesses
Individuals may operate a business as a Sole Proprietorship. Income and expenses are reported on the proprietor's federal individual income tax return and in return the income will flow through to the Connecticut Individual Income Tax Return.
A sole proprietorship has a single owner who has complete control over a business. The single owner will claim all the profits, make all business decision, and take full responsibility for the debts and obligations of the business. A sole proprietorship is not recognized as an entity separate from its owner or proprietor and is not taxed separately. The income the owner receives from the business is taxed at the owner’s personal income tax rate. Sole proprietorship business owners will file a Federal Schedule C, Profit or Loss From Business, Federal Form 1040, and a Connecticut Individual Income Tax Form CT-1040. The starting income on the Connecticut tax return is the federal adjusted gross income from Federal Form 1040, Line 37; or Federal Form 1040A, Line 21; or Federal Form 1040EZ, Line 4.