If you freelance, have a side job, run a small business, or are self-employed, you may need to fill out IRS Schedule C when it’s time to file your taxes.
The IRS Schedule C is a tax form for reporting the profit or loss of a business. You fill out Schdule C at tax time and attach it or file it electronically with Form 1040.
Schedule C is typically for individuals operating sole proprietorships or single-member LLCs.
A Schedule C is not the same as a Form 1099, although you may need IRS Form 1099 (a 1099-NEC in particular) to fill out a Schedule C.
Schedule C is for two types of businesses:
- Sole proprietors or;
- Single-member limited liability corporations (LLCs).
Schedule C is not for C corporations or S corporations.
Sole proprietorships are unincorporated businesses owned by a single person who is entitled to all profits and is responsible for all losses and liabilities. They are usually the choice of people who are self-employed, have a side job, are independent contractors, or run a business by themselves.
For tax purposes, the IRS says you have a business if you continuously and regularly carry on your business to earn money.
What information is used in a schedule C?
The schedule C is a place to report your business income, as well as all the types of expenses you incurred to run your business. Your business income minus your business expenses is your net profit (or loss). Net profit is reported as income on Form 1040.
This is the information you will need:
- The income statement
- The balance of your business for the fiscal year.
- Receipts of your business expenses.
- Inventory records, if you have inventory.
- Mileage and other vehicle records, if used for business, leisure.
