Which of the following forms is specifically designed for sole proprietors to report business income?

Sole proprietors use Schedule C to report their business income and expenses as part of their individual income tax return. Schedule C, titled "Profit or Loss from Business," is specifically designed for individuals operating a business as a sole proprietorship. When filing their annual Form 1040, sole proprietors attach Schedule C to detail their business revenues, allowable deductions, and ultimately their net profit or loss, which is then transferred to Form 1040.

While Form 1040 is the main individual tax return where all income must be reported, it is not exclusive to sole proprietors and encompasses all types of income. Form 1065 is used for partnerships, and Form W-2 reports wages paid to employees by employers, which does not apply in the case of a sole proprietor reporting their business income. Thus, Schedule C is the correct choice for sole proprietors to accurately reflect their business income.