Filing Your IRS Schedule C Form

As a business owner, it’s important to understand how to file your taxes because your tax return could give you additional revenue that you can put toward your debts or important expenses. Read further to learn more about IRS Schedule C, the types of businesses that may need to fill out Schedule C and tips to help you complete the form yourself.

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What is Schedule C and the Schedule C form?

Schedule C is a two-page tax form issued by the IRS that certain businesses may fill out as part of their annual taxes. This form, titled "Profit or Loss From Business," requires business owners to record information about their profits and losses for the past year, with profits being income and losses being any expenses over $1,000 that didn’t incur a greater profit. Schedule C forms might determine how much money you receive as part of your tax return.

 

Types of businesses that may need to include Schedule C on their taxes

There are a few different types of businesses that may need to include Schedule C on their taxes. According to the IRS, here are some examples to help you identify whether your business will file a Schedule C:

  • Sole proprietors
  • Businesses with less than $5,000 in expenses
  • Businesses just reporting net profit
  • Businesses without product inventory

 

Key components of the Schedule C form

Here are the key components on the Schedule C form and details for each as mentioned by the IRS in their filing instructions:

 

Business name and licensing information

At the top of Schedule C, write your name, the name of your business, your Social Security number and your business’ employer identification number. The last part of this section asks you to select the accounting method you use and answer additional yes or no questions.

 

Income details

The first official section of Schedule C asks you to enter your company’s income details. These can include the following:

  • Receipts of sales
  • Returns and allowances
  • Costs of goods sold
  • Gross profit
  • Other income
  • Gross income

 

Expense details

The second section asks you to detail the specific amounts of money you spent on different business expenses before providing the total money amount spent, so consider having your balance sheet on hand. You will need to enter the amounts you spent in the following areas:

  • Advertising
  • Car and truck expenses
  • Commissions and fees
  • Contract labor
  • Depletion
  • Depreciation
  • Employee benefits programs
  • Insurance
  • Interest 
  • Mortgage
  • Legal
  • Office expenses
  • Pensions
  • Rent or lease
  • Machinery or equipment
  • Business property
  • Maintenance
  • Supplies 
  • Taxes and licenses
  • Travel and meals
  • Utilities
  • Wages
  • Other expenses

 

Costs of goods sold

This section is for businesses that sell products. It asks you to outline the costs associated with purchasing and manufacturing materials. Here is what you may need to provide information about:

  • Methods used to value closing inventory
  • Whether you changed quantities or values of inventory
  • Inventory at the beginning of the year
  • Cost of items withdrawn for personal use
  • Cost of labor
  • Materials or supplies
  • Other costs
  • Total costs
  • Inventory at the end of the year
  • Cost of goods sold

 

Information on commercial vehicles

The fourth section asks you to outline expenses from a commercial vehicle. The form asks for the exact details to the following elements:

  • The date you started using a vehicle for commercial purposes
  • The number of miles you drove during the year specified for business, commuting or other specific circumstances
  • Whether your vehicle was available for personal use
  • Whether you or a spouse have another vehicle available for personal use
  • Whether you have evidence to support your claims

 

Other expenses

If your business has additional expenses that Schedule C did not specify, you can list those expenses and their money amount in this section.

 

Tips for filling out your Schedule C form

Here are some tips you may want to consider to help you fill out your Schedule C:

  • Read the IRS’s instructions for Schedule C. Gather your documents (balance sheet, receipts, etc.) before you sit down to fill out Schedule C.
  • Determine whether you need to fill out multiple Schedule C forms.
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