Yep, you owe on it, form or not.
These types of things are why a good accountant is worth what you pay. Get yourself set up as an LLC and start enjoying the tax advantages. You have to pay either way, but with an LLC its much easier to deduct expenses, depreciate things like your computer, etc. and lower what you owe. I know a guy who owns a printing company, and one year he owed almost no fed tax at all, all through lowering his taxable income with biz expenses, equipment depreciation, etc. Even if you don't LLC, get a real tax accountant to handle things for you. You'd be amazed at the deductions they know about that you never even heard of.
Oh, and talk to them at the BEGINNING of the year, not just at the last minute before tax time. There are certain things you should be tracking, certain ways of doing things, etc. that will make deductions acceptable or not. For example, my LLC is located officially in my home, so anytime I drive anywhere for biz, it's deductible mileage. I started that when I was freelancing graphic design. The guy I was primarily working for offered me office space in his building for free, but then my drive to and from (50 miles a day) wouldn't be deductible because it was commuting, not business travel. And once you're on biz travel, your meals become deductible.
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DISCLAIMER: I'm not an attorney, CPA, tax guy, etc., and can barely even find my keys in the morning, so this is just FYI and I don't make any claim, warranty, guarantee that it is accurate. Always consult a professional. That's what they're there for, and the good ones are worth it.
