For federal income tax, a sole proprietor commonly reports business results on Schedule C and computes self-employment tax on Schedule SE. Owner draws are not deductible wages.
A single-member LLC can have the same federal income-tax reporting while having a different legal structure. Keep a separate business account and supporting records even when the tax return is filed personally.
An example
Hypothetical: an owner transfers $5,000 from the business checking account to personal checking. The transfer is an owner draw, not a business expense and not a separate measure of taxable profit.
Reviewed October 7, 2026. IRS reference ↗
This is a general reference. Discuss how the rules apply to your business with your tax professional.