What Is a Schedule C Business?
Even if you don't think of yourself as a business, you may be one in the eyes of the Internal Revenue Service (IRS). Knowing the basics of a Schedule C business can help you understand what may be required of you come tax time.
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Entities
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A Schedule C business is a sole-proprietor-run business. The owner is fully responsible for the care and operation of their business.
Explanation
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All businesses are required to report their operational profit or loss every year to the IRS. Schedule C is the name of the IRS-required form businesses need to fill out and attach to the owner's individual year-end 1040 tax filing to claim business-related income and expenses.
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Simplified Version
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Sole proprietors who have $5,000 or less in expenses, carry no inventory, had only one Schedule C business, use the cash method of accounting and show a profit for their business activities may qualify to use a Schedule C-EZ, which is a simplified version.
How to Find It
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Schedule C forms are available annually on the Internet via the IRS website, and offline wherever tax forms are available in your area. Though it's a simple form, a trained tax preparer can also complete the form and help you find business-related expenses you might otherwise miss.
Uses
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Sole-proprietor businesses are the most common Schedule C business. Independent contractors, home business consultants (i.e., Pampered Chef, et al) and workers who receive a 1099-MISC from their clients or customers can also use the Schedule C form.
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