Who is considered self-employed?

Insure Oklahoma will use IRS definitions to determine eligibility for self employed persons. These definitions and guidelines can be found at IRS Publications

Who is considered self-employed?:

You are self-employed if either of the following applies to you:

  • You carry on a trade or business as a sole proprietor; or
  • You are a member of a partnership or limited liability company that files a Form 1065, US Return of Partnership that carries on a trade or business.
  • If you have a part-time business in addition to your regular job.

Business Activities

A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. The regularity of activities and transactions and the production of income are important elements. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need, however, to make ongoing efforts to further the interests of your business.

  • If you are in business for yourself or carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself self-employed and you would file with your Form 1040 a:
  1. Schedule C: Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. Or
  2. Schedule C-EZ: Small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of a Schedule C.
  • If you are self-employed you must pay Self-Employment tax.
    • Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. A Schedule SE is used to pay self employment tax.
  • If you are self employed you must pay estimated taxes.
    • This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you don’t make quarterly payments you can be penalized for underpayment at the end of the tax year.