Who qualifies as a self-employed individual?

A business partner in a firm qualifies as a self-employed individual because they are engaged in a business venture where they share in the profits and losses. Unlike traditional employees who work for a corporation and receive a salary and benefits, a business partner has an ownership stake in the firm and is responsible for the management and operational decisions. This typically means they report their earnings on a personal tax return through a pass-through entity, such as a partnership.

In contrast, employees of a corporation, contractors on a fixed salary, and interns working for credit are typically classified as employees or trainees, as they do not have the same level of independence, responsibility, or risk associated with running a business. Employees receive wages, while fixed salary contractors usually follow the guidelines of a standard employer-employee relationship, and interns earn academic credit rather than monetary compensation, further distinguishing them from self-employment.