Tax
Schedule C (Profit or Loss from Business)
The Form 1040 attachment where sole proprietors and single-member LLC owners report business income and expenses.
Schedule C is the default tax home for an unincorporated one-owner business: freelancers, consultants, independent contractors, and single-member LLCs that haven't made a corporate election. Revenue minus deductible expenses produces a net profit that flows to the 1040 and — critically — onto Schedule SE, where it's hit with 15.3% self-employment tax on top of income tax.
Everything the business earns and spends belongs here: 1099-NEC income, cash and card receipts, home office deduction, vehicle expense, health insurance for the self-employed, and depreciation on equipment.
Schedule C filers are audited at higher rates than almost any other individual filer profile — the combination of self-reported income, cash receipts, and aggressive expense categories (vehicle, meals, home office) draws IRS attention. Clean books and receipts are the defense.
Common pitfalls
- Reporting only income that arrived on a 1099 — all business income is taxable whether or not a form was issued
- Running losses year after year — the hobby-loss rules let the IRS disallow deductions for activities not run for profit
- Staying on Schedule C when profits far exceed a reasonable salary — an S-corp election could be cutting the self-employment tax bill
Related service
Visit relevant serviceHave a Schedule C (Profit or Loss from Business) situation in your business?
We'll show you how this applies to your specific facts — and scope a plan if you want us to handle it. Fixed monthly fee, tailored to your needs.
Talk to a partner