Who Should Use a Schedule C?

If you own a small business, you file a Schedule C with the Internal Revenue Service. The purpose of this form is to report business income or loss. A hobby does not qualify as a business.

Sole Proprietors

A one-owner business that is not incorporated should file a Schedule C along with the owner's 1040. A single-member limited liability company may elect to as well.

Sole Proprietors Who Turned a Profit

In this case, "profit" means more than $400 for the year, after legitimately deductible business expenses.

Sole Proprietors Who Operated at a Loss

If your business operated at a loss and you're not required to pay taxes on it, file the Schedule C anyway and you'll be able to deduct this year's losses another year.

Members of a Joint Venture

Two spouses owning an unincorporated business, who both participate materially in the business, may file separate Schedule C forms in lieu of filing a partnership return, or Form 1065.

Business Owners Who Want Retirement Plans

Schedule C business owners have options for pension plans, including 401k and Keogh plans.

References

• 2009 Instructions for Schedule C
• Must You File a Schedule C?
• Who Should File a Schedule C