Schedule C for Small Business Taxes - Your Questions Answered

Answers to Your Questions about Schedule C

Sole proprietors and single-member LLC owners file their business tax returns on Schedule C.  The net income from this form is included with other income on the individual's Form 1040 - personal tax return. 

In this article you'll learn:

  • More about Schedule C and who must file this form
  • Information and tax records needed to complete Schedule C, as well as how to complete this form.
  • How to file Schedule C with the IRS
  • Whether you might be eligible to file Schedule C-EZ for a simple business
  • How to calculate your self-employment tax payment requirement for Social Security and Medicare taxes, using the net profit from y our Schedule C. 
  • How to calculate cost of goods sold, if you have product inventory. 
  • And how to correct errors in your Schedule C.

In addition, you'll find information about how to file Schedule C forms for a partnership with two spouses. If your business is a husband-wife partnership, you may be able to file as a qualified joint venture, using two Schedule C forms and dividing business income and losses between you and your spouse. 

What Tax Records Do I Need In Order to Complete Schedule C?

Tax Records for Small Business Taxes
Tax Records for Small Business Taxes. Jim Corwin/Getty Images

This article lists the records you need to complete Schedule C and explains the details needed. 

You should start with a profit and loss statement, and records on your business assets (equipment and vehicles) and depreciation. Include  travel expense records. If you have a home-based business, you will need information on your home business expenses. 

If you have an inventory of products, you will need to gather records and information for cost of goods sold. 

Finally, of course, you'll need documentation on your business expenses for the year.  More

How Do I Complete Schedule C?

Follow the instructions to gather information and complete Schedule C and calculate the net income from your business.  You must complete a separate Schedule C for each sole proprietorship or single-member LLC owned by you or your spouse. More

How Do I Include Schedule C Information in my Personal Tax Return?

Next, take the information from your net income calculation and add it to your personal tax return.  This article shows you exactly where to include the net income figure on your Form 1040, and how your Schedule C information fits into your total tax bill.  More

Can I File Schedule C-EZ?

The IRS says:  small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule C. Learn more about the requirements for being able to file this form and how to complete it. More

How Do I File Schedule C for a Husband-Wife Partnership?

A husband-wife partnership may be able to be considered as a qualified joint venture and be able to file taxes as two sole proprietors, saving the cost of preparing a partnership tax return. In this case, each spouse completes Schedule C for his or her portion of the company's income and expenses.  Read more about qualifications and filing in this article. More

Must I File a Schedule C for Each Business I Own?

Yes, you must file a business tax return for every business you own, even if that business had a loss for the year.  You can't lump all your businesses together and file one Schedule C for all of them.  More

Calculating Cost of Goods Sold for Schedule C

 If you have products that you sell, you may have an inventory of those products. In this case, you will need to do a calculation of cost of goods sold on your Schedule C. This article explains the process of calculating cost of goods sold.  More

Calculating Self-employment Tax Based on Schedule C Income

 Self-employment tax is the tax you pay for Medicare and Social Security, based on your business income from Schedule C. This article explains how the calculation for self-employment tax works, using Schedule SE.  More

How Do I Correct an Error in Schedule C? Do I File an Amended Schedule C?

To correct an error in Schedule C, you can't just file a new Schedule C, because this form is connected the rest of your personal tax return. The total amount you pay for income taxes and self-employment taxes depends on the information from your Schedule C. To make changes to Schedule C, you will need to file an amended personal income tax return, using Form 1040x. This article provides detailed instructions on how to file this amended Schedule C, along with your amended personal tax return.  More