As defined by the IRS:
"If you are in business for yourself, carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself as a self-employed individual. You are an independent contractor if the person for whom you perform services for has only the right to control or direct the result of your work, not what will be done, or how it will be done."
If you are going to operate as a sole proprietorship, your social security number will be your business's tax identification number, and filing your taxes will be significantly less complicated than if you choose to operate as a partnership or incorporate.
Learn about how working at home affects your social security taxes, Medicare, etc, as well as what business expenses you can and cannot deduct.
Don't rely on the information you receive from others on how to set up and file taxes for your home job or business. As often as the laws change, a small change could possibly affect you greatly.
You should also visit the Internal Revenue Service (IRS) website to locate valuable self-employment tax information as well as forms and publications, because even if you do not owe any income tax, you must complete Form 1040 and Schedule SE to pay self-employment Social Security tax.
Find your state's tax laws online, and ask questions early. Don't wait until the deadline to file before you realize you have no idea what to do!
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