What Is Schedule C? Who Can File and How to File for Taxes

Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.

Ebony Howard is a certified public accountant and a QuickBooks ProAdvisor tax expert. She has been in the accounting, audit, and tax profession for more than 13 years, working with individuals and a variety of companies in the health care, banking, and accounting industries.

Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.

What Is Schedule C?

Schedule C: Profit or Loss from Business is an Internal Revenue Service (IRS) tax form that is used to report income and expenses for a business. Schedule C must accompany Form 1040, which is a taxpayer's main tax return. Self-employed individuals, sole proprietors of a business, or a single-member limited liability company (LLC) must report any activity conducted for income or profit using Schedule C. The resulting profit or loss calculations are commonly considered self-employment income.

Key Takeaways

• Schedule C is a tax form used to report business-related income and expenses.
• This schedule is completed by self-employed individuals, sole proprietors, or single-member LLCs.
• A business expense must be ordinary and necessary to be listed as a tax deduction on Schedule C.
• The taxpayer uses Schedule C to calculate the business’s net profit or loss for income tax purposes.
• Schedule C must be filed with Form 1040.

Who Files Schedule C: Profit or Loss From Business?

As noted above, the following people must complete Schedule C when filing their annual tax return:

• Self-employed individuals, including freelancers, independent contractors, and statutory employees
• Anyone who operates a business as a sole proprietor
• A single-member LLC

There are a few other less common scenarios that require the use of Schedule C. These include receiving income and taking deductions from certain qualified joint ventures and receiving certain income reported on Form 1099-MISC: Miscellaneous Income.

A single-member LLC is treated like a sole proprietorship for tax purposes unless it elects to be treated like a corporation for tax purposes.

What Information Does Schedule C: Profit or Loss From Business Include?

This schedule asks about the taxpayer’s personal information, including the business name, product or service, and business address. Taxpayers must also include other pertinent information related to their business, including:

• The preferred accounting method
• Gross receipts or sales
• Cost of goods sold (COGS)

Schedule C is also where business owners report their tax-deductible business expenses, such as advertising, certain car and truck expenses, commissions and fees, supplies, utilities, home office expenses, and many more. One important thing to note is that a business expense must be ordinary and necessary to be listed as a tax deduction on Schedule C.

Small business owners also use Schedule C to take a deduction for the use of a personal vehicle for business purposes, to report when it was placed in service for business purposes, and to report the number of miles that it was driven for business use.

A business expense must be ordinary and necessary to be listed as a tax deduction on Schedule C.

How to File Schedule C: Profit or Loss From Business

Using the entries on Schedule C, the taxpayer calculates the business’s net profit or loss for income tax purposes. This figure is reported on Form 1040 and is then used to calculate the taxpayer’s overall tax liability for the year. Taxpayers who operate more than one sole proprietorship must file a separate Schedule C for each business.

Sole proprietors who are engaged in certain lines of business may have to file other forms in addition to Schedule C. For example, landlords may need to file Schedule E to report rental income that is not subject to self-employment tax, and sole proprietors with a home office will need to file Form 8829 to claim a deduction for expenses related to the business use of their home.

All versions of Schedule C are available on the IRS website.

Do I Have to File a Schedule C If I Receive a 1099-NEC?

If you are self-employed or a contracted worker, you will receive a 1099-NEC: Nonemployee Compensation from any business that pays you more than $600 in a year. You will need to report this income on Schedule C.

I Have No Income. Do I Need to File a Schedule C?

If you have no income and no deductible business expenses to report in a given tax year, you do not need to file a Schedule C for your business.

Does an LLC File a Schedule C?

If you have a single-member LLC and have not elected to be treated as a corporation for tax purposes, you must file a Schedule C. It is essentially the same as a sole proprietor.

The Bottom Line

File Schedule C if you have to report business-related expenses and income as part of your annual tax return if you are self-employed, run a business as a sole proprietor, or have a single-member LLC that isn't treated as a corporation. Reportable income includes dollars earned through bartering. The information on this form must be included on and accompany Form 1040 each year you file.

1. Internal Revenue Service. "Instructions for Schedule C, Profit or Loss From Business," Pages 1-2.
2. Internal Revenue Service. "Instructions for Schedule C, Profit or Loss From Business," Page 2.
3. Internal Revenue Service. "Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)," Page 1.
4. Internal Revenue Service. "Publication 535, Business Expenses," Page 3.
5. Internal Revenue Service. "Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)," Page 2.
6. Internal Revenue Service. "About Schedule E (Form 1040), Supplemental Income and Loss."
7. Internal Revenue Service. "About Form 8829, Expenses for Business Use of Your Home."
8. Internal Revenue Service. "Reporting Payments to Independent Contractors."
9. Internal Revenue Service. "Instructions for Schedule C, Profit or Loss From Business," Page 7.

The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.

and a host of other considerations." width="400" height="300" />

A filing extension is an exemption made for taxpayers who are unable to file their federal tax return by the regular due date.

Section 1341 is a tax credit from the I.R.S. available for taxpayers who have to repay more than $3,000 in wages from a prior year.

A qualified higher education expense is a tax credit for the parents of students attending a college or other post-secondary institution.

A flow-through entity is a legal business entity that passes income to the owners and/or investors of the business. It's sometimes referred to as a disregarded entity.

A widow(er)'s exemption is one of several forms of state or federal tax relief available to a surviving spouse in the period following their spouse's death.

IRS Form 1310: Statement of Person Claiming Refund Due a Deceased Taxpayer is used to request a federal tax refund on behalf of a deceased taxpayer.

• About Us
• Terms of Service
• Dictionary
• Editorial Policy
• Advertise
• News
• Privacy Policy
• Contact Us
• Careers
• EU Privacy

We Care About Your Privacy

We and our 100 partners store and/or access information on a device, such as unique IDs in cookies to process personal data. You may accept or manage your choices by clicking below, including your right to object where legitimate interest is used, or at any time in the privacy policy page. These choices will be signaled to our partners and will not affect browsing data.

We and our partners process data to provide:

Store and/or access information on a device. Use limited data to select advertising. Create profiles for personalised advertising. Use profiles to select personalised advertising. Create profiles to personalise content. Use profiles to select personalised content. Measure advertising performance. Measure content performance. Understand audiences through statistics or combinations of data from different sources. Develop and improve services. Use limited data to select content. List of Partners (vendors)