IRS

Form Schedule C

Rev. 2024

Profit or Loss From Business

Reports income and expenses from a sole proprietorship or single-member LLC.

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Plain English

Schedule C is the profit-and-loss statement for your small business if you're a sole proprietor or single-member LLC. It shows the IRS how much your business earned in revenue and how much it spent in expenses, and the net profit or loss flows to your personal tax return.

Quick Facts

Who: Sole proprietors, single-member LLCs, and independent contractors who operate their own business (including side hustles and gig work).
What: A profit-or-loss statement for a business that reports income, expenses, cost of goods sold, and calculates net profit subject to self-employment tax.
When: Filed annually with Form 1040 by April 15 (or October 15 with extension).
Where: Attached to your Form 1040 when filing your tax return.
Why: Schedule C separates your business income from personal income and calculates the profit that is subject to self-employment tax (Social Security and Medicare).
How: Enter business name, code, EIN. Report gross receipts. Deduct ordinary and necessary business expenses. Calculate net profit or loss. Profit flows to Form 1040 and Schedule SE.

Common Risks & Mistakes

  • •Claiming personal expenses as business deductions — only ordinary and necessary business expenses qualify
  • •Not substantiating deductions with receipts — IRS may disallow deductions on audit
  • •Incorrect business code — using wrong NAICS code may trigger IRS review
  • •Home office deduction confusion — must be regular and exclusive use, not just occasional
  • •Failing to report all 1099-NEC income on Schedule C — IRS cross-matches 1099 data
  • •Losing money for too many consecutive years — IRS may classify business as a hobby under the hobby loss rules

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Field-by-Field Guide

Info
Business NameREQUIREDtext

Name of the business. Your own name if no DBA.

Principal Business CodeREQUIREDtext

Six-digit code describing your type of business from IRS instructions.

e.g. 541511 — Custom Computer Programming
EIN or SSNREQUIREDein

EIN if you have one; otherwise your SSN.

Part I
Gross Receipts / SalesREQUIREDamount

Total revenue before returns and allowances.

Cost of Goods Soldamount

Direct costs of goods sold if you carry inventory (from Part III).

Gross ProfitREQUIREDamount

Gross receipts minus cost of goods sold.

Part II
Total ExpensesREQUIREDamount

All ordinary and necessary business expenses: advertising, car, insurance, supplies, utilities, home office, etc.

Net Profit or LossREQUIREDamount

Gross income minus total expenses. If profit, subject to SE tax. If loss, may offset other income.

Part IV
Vehicle Informationtext

If deducting car/truck expenses: date placed in service, business miles, total miles.

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9
Fields
7
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4
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Disclaimer: We do not provide legal advice. We translate legal language into plain English and help you prepare for a conversation with a lawyer.