How to Stop Filing a Schedule C
While many self-employed individuals are required to file Schedule C for their businesses, there are many ways to avoid this filing. Schedule C applies only to a certain category of the self-employed, and by changing the corporate structure of your business, or by abandoning it entirely, you can stop filing Schedule C with your taxes.
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Instructions
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Close your business. Schedule C is required by the IRS for individuals who carry on business as a sole proprietor or an independent contractor. If you would like to stop filing a Schedule C, the quickest and easiest way is to simply shut down your business. You will have to file a final Schedule C in for the tax year in which you closed the business, but after that, you will not have to file Schedule C with your taxes unless you earn sole proprietor or independent contractor income.
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Convert to a partnership. According to the IRS, if you are a member of a partnership that conducts a trade or business, or if you are a member of a Limited Liability Company (LLC) that chooses to be treated as a partnership, your share of the partnership's income is considered self-employment income. However, unlike the cases for sole proprietors, or for owners of unincorporated businesses, partnership earnings are reported on Form 1065, "U.S. Return of Partnership Income," not on Schedule C.
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Incorporate. If you incorporate your business, you can also avoid filing Schedule C. Most self-employed individuals who incorporate form an S-corporation, which is allowed for domestic corporations up to 100 employees. Shareholders of S-corporations, oftentimes consisting of just the business owner, are allowed to report corporate income and losses on their personal tax returns and are assessed income tax at personal income tax rates. Usually, business owners filing taxes as S-corporations are only required to file Form 1040 (see reference 3). If your company is larger than 100 employees, or if you do not want to form an S-corporation, you can form a C-corporation, similar in structure to most of the well-known companies in the world. While C-corporation tax filings can get very complicated, they do not include Schedule C, so this is another way to avoid filing a Schedule C with your taxes.
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