Schedule C

Schedule C

Schedule C is a form used by sole proprietors to report income or loss from their business activities. It is filed as part of an individual’s income tax return (Form 1040) and details revenue, expenses, and net profit or loss from self-employment.

The form includes sections for reporting gross receipts, cost of goods sold, and various business expenses such as advertising, car and truck expenses, depreciation, and utilities. The net profit or loss calculated on Schedule C is then transferred to the taxpayer’s Form 1040, impacting their overall taxable income.

For example, if a freelance graphic designer earns $50,000 in revenue and incurs $20,000 in business expenses, they would report these figures on Schedule C, ultimately showing a net profit of $30,000 that contributes to their taxable income.