WHAT IS A SCHEDULE C IRS FORM?

• Schedule C is used to report income and expenses from a business you own as a sole proprietor or single-member LLC.

• If you are self-employed or receive 1099-NEC Forms, you'll likely need to use Schedule C to report income and expenses for your trade or business.

• To be deductible on Schedule C, expenses must be both ordinary and necessary for your business.

What is Schedule C: Profit or Loss from Business?

IRS Schedule C, Profit or Loss from Business, is a tax form you file with your Form 1040 to report income and expenses for your business. The resulting profit or loss is typically considered self-employment income.

Who files a Schedule C tax form?

You'll need to file a Schedule C if you earn income through self-employment as a sole proprietor or as a single-member Limited Liability Company (LLC). You wouldn't use a Schedule C to report business income and expenses of a C Corporation or S corporation.

If you are self-employed, your business clients should send you 1099 forms such as 1099-NEC. These forms report the money that a business has paid you during the tax year. You may also need to send 1099s to any vendors or contractors you have paid through your business. These payments are typically included as expenses on your Schedule C along with your other eligible business expenses.

Does an LLC file a Schedule C?

You can also operate your own business as a single-member LLC. In that case, you’ll usually still need to complete Schedule C. It doesn't have to be a business with employees or an office. If you run a single-member LLC, there’s no distinction between you and the LLC for tax purposes. Instead, whatever profits or losses produced by the LLC go directly onto your personal tax return. The IRS considers this a “Disregarded Entity.”Regardless of whether you’re a sole proprietor or single-member LLC, the defining factor of both is that you're the boss, and there's no one writing you paychecks or withholding taxes from your pay.

Is Schedule C only for self-employed?

You might be both self-employed and an employee of another business. If you work as an employee with pay reported by your employer on Form W-2, you may also need to file a Schedule C when you have income you earn outside of your W-2 job. You typically should not include your W-2 income with your self-employed income on Schedule C.

You use Schedule C when you are operating a business. If you are making some side money without the intent of running a business and making business profits then it might count as a hobby. In this case, your income and expenses aren’t reported on Schedule C. Instead, you typically report the income on Schedule 1, Part I, Additional Income, Line 8, “Other income.” When your activity is considered a hobby, you need to report all of the income but you can't use any of your expenses as tax deductions.