In a sole proprietorship, how are the physician and the practice treated for tax purposes?

In a sole proprietorship, the physician and the practice are treated as a single entity for tax purposes. This means that the income and expenses of the practice are reported on the individual's personal tax return. The profits or losses from the practice flow directly to the owner's personal tax obligations, which simplifies tax reporting and eliminates the need for a separate corporate tax return.

This structure allows for straightforward taxation, as there is no legal distinction between the owner and the practice in terms of income reporting. It reflects the ease of managing taxes in a sole proprietorship, and any profits are subject to the individual tax rate of the owner. This characteristic of sole proprietorships is one of the reasons many physicians choose this business structure, particularly in the early stages of establishing their practice.