When a taxpayer has an unincorporated business and is a sole proprietor business owner, they are required to file taxes on Schedule C attached to their Form 1040. Schedule C allows taxpayers to deduct the expenses incurred during the tax year they conducted business from the gross income received. Schedule C taxpayers are required to pay half of their Self-Employment tax since they work for themselves. Any debt incurred by a sole proprietor will be recorded as a 1040 liability under the taxpayers SSN and can be found on their IMF (Individual Master File). **Taxpayers need to be able to prove the figures listed on the 1040, Schedule C.