How to Prepare Tax Schedule C

If you operate a business for the sole purpose of making profit and have made or lost money then you must prepare Tax Schedule C. A business does not include a hobby or sporadic activities. You must be working on it with continuity for it to be Schedule C eligible.

Difficulty: Moderate

Instructions

1. Complete the personal information on the top of Schedule C. For line A enter the type of business you have and/or your products and goods. For line B look at page C-8 of the Tax Schedule C instructions to obtain your business code.

2. Fill out the section on income. You will need your receipts and/or your W-2 form. Refer to page C-3 of the instructions if your income was reported on a W-2 and the "Statutory Employee" box was checked.

3. Enter your expenses for your business in Part 3. You will need your receipts for your expenses to fill out this information. Make sure to hold on to your receipts for proof if questioned. Line 30 is to be expenses for your business use of your home only.

4. Write in the cost of your goods that you sold for Part 4. Your inventory information would be useful in completing this section.

5. Note the expenses of your vehicle if you used it for business. You will need odometer readings from before and after business trips as evidence of your vehicle being used for business.

6. Finish Tax Schedule C by entering any other expenses on the lines at the bottom of the page. Enter the total on line 48.

[BestSoyLatte]

on 3/1/2009 If I have two totally non related businesses of my own do I have to fill out TWO schedule C's? Or is there something else I need to do?PS. This was great!