Many small business proprietors start with a sole proprietorship to avoid the costs of forming a corporation or LLC. This is a wise decision as statistics show that most small businesses lose cash for the first several years. An argument that tips, in some or all cases, aren't transfer pricing "compensation received for the performance of non-public services" most likely will work. Nonetheless, if it did not, I would expect the internal revenue service to assert this fees. This is why I put a...