What Is Schedule C? Profit or Loss From Business Explained
Schedule C (Form 1040), officially titled Profit or Loss From Business, is a U.S. tax form used by self-employed individuals to report income and expenses from a business they operate.
This form is filed together with your individual income tax return and is required by the :contentReference[oaicite:0]{index=0} for sole proprietors and single-member LLCs.
What Is Schedule C?
Schedule C reports how much money your business earned and how much it spent during the tax year. The result shows whether your business had a profit or a loss.
The net profit or loss from Schedule C flows directly into your Form 1040.
Who Needs to File Schedule C?
You need to file Schedule C if you are:
- A sole proprietor
- A freelancer or independent contractor
- Self-employed or gig worker
- A single-member LLC (not taxed as a corporation)
If you received a 1099-NEC, you will almost always need to file Schedule C.
When Is Schedule C Filed?
Schedule C is filed:
- Together with your annual Form 1040
- By the individual tax filing deadline (usually April 15)
Late or incorrect filing may result in penalties or additional taxes.
What Income Is Reported on Schedule C?
- Payments from clients or customers
- Income reported on 1099 forms
- Cash, check, or electronic payments
- Other business-related income
What Expenses Can Be Deducted?
- Advertising and marketing
- Office supplies and equipment
- Internet, phone, and utilities
- Vehicle and travel expenses
- Rent and business insurance
- Professional fees and services
How to Fill Out Schedule C
- Part I – Income: Report gross receipts and total income.
- Part II – Expenses: List deductible business expenses.
- Part III – Cost of Goods Sold: Complete if applicable.
- Part IV – Vehicle Information: Required if claiming vehicle expenses.
- Part V – Other Expenses: List additional costs.
Sample Schedule C (For Reference Only)
Schedule C – Profit or Loss From Business
Business Name: ________________________________
Principal Business Activity: ___________________
Gross Receipts: $______________________________
Total Expenses: $______________________________
Net Profit / Loss: $____________________________
This sample is for reference only and is not an official IRS form.
Important Notes
- Schedule C income is subject to income tax and self-employment tax.
- Keep receipts and records to support deductions.
- Errors may trigger audits or penalties.
Disclaimer: This article and sample form are provided for informational and reference purposes only and do not constitute tax or legal advice.