What You Need to Know to File Schedule C

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If you are filing business taxes as a sole proprietorship or single-member LLC, you'll need to file taxes using Schedule C, Profit or Loss from Business. Make sure you have your Employer Identification Number (EIN) as well as any relevant documentation ready when filing your tax return.

Key Takeaways

  • You'll need to include the profit or loss from Schedule C on your tax return.
  • The information on Schedule C is used when you fill out Schedule SE to calculate your self-employment taxes.
  • You and your spouse might be able to fill out a single Schedule C as a Qualified Joint Venture, as long as your business is not an LLC.

What Is Schedule C?

Schedule C is the business tax return used by sole proprietors and single-member LLCs. It's used to report net income for a small business. This income is included in the owner's income tax return along with other income.

Who Must File Schedule C

If you operate your business as a sole proprietorship (that is, you have not designated a legal business entity such as an LLC, corporation, or partnership), you must complete a Schedule C. If you operate your business as a single-member limited liability company (LLC), you will also use Schedule C for your business income taxes.

Documents Needed for Schedule C

Before you begin to work on your Schedule C, you will need to gather certain end-of-year business information. You will need:

  • A profit and loss statement (sometimes called an income statement) showing the entire year's income and expenses
  • A balance sheet for the year ending December 31
  • Statements about assets showing purchase of assets during the year
  • Information on inventory to prepare a cost of goods sold calculation if your business sells products
  • Documents that can prove the legitimacy of business expense deductions you took, including travel and driving expenses
  • Home business expenses


Using step-by-step instructions to complete Schedule C will help you ensure you don't leave anything out.

Include Schedule C on Your Tax Return

The information about your net business income from line 31 of your Schedule C is added to your personal tax return on Schedule 1, line 3. This is true whether you have a profit or a loss, as long as all of your investment is at risk in the event of a loss. This income is included with all other income sources to determine your total adjusted gross income tax liability for that year's taxes.


As a small business owner, you don't have taxes deducted from your income, so you may need to pay quarterly estimated taxes as well as self-employment taxes to avoid penalties.

If You Own Multiple Businesses

Schedule C is used to report the net income from one business. So if you have several small businesses that use Schedule C, you must complete this form for each business. Then, net income totals from all Schedule Cs are added together on Schedule 1 of your personal tax return.


You'll need a separate Employer Identification Number (EIN) for each business.

Schedule C for Married Business Owners

If you and your spouse own a business as community property (in a community property state), you are a partnership. But you may be able to elect to be taxed as a Qualified Joint Venture (QJV). There are specific qualifications, and two-spouse LLCs can't generally qualify as a QJV.

If you meet the criteria, you divide the income and expenses between the spouses, based on their share of the business. Then file two Schedule C forms, one for each spouse. You may want to check with your tax advisor before attempting to file your business taxes as a qualified joint venture.

How to Correct Errors on Schedule C

To correct an error in Schedule C, you will need to file a corrected Schedule C as part of your amended personal tax return. You'll need to file Form 1040X to amend your tax return. You only need to file Form 1040X if you have already filed the incorrect Schedule C. Otherwise, you can simply fix your error and submit an ordinary Schedule C to the IRS.

Self-Employment Taxes

The net income information on Schedule C is used to determine the amount of self-employment tax you owe for Social Security and Medicare taxes. Schedule SE is used to calculate the self-employment tax amount.

Other Schedules You May Need to File

If you have other income (not personal income) or special deductions, you may need to file one or more of these schedules as part of your tax return, in addition to Schedule C:


Schedule C can be complicated, even for businesses with relatively simple tax returns, and you don't want to miss anything important. Get help from a tax professional or use business tax preparation software to prepare Schedule C along with your personal tax return.

Frequently Asked Questions (FAQs)

How do I prove my Schedule C income?

To prove that the gross income you list on your Schedule C form is accurate, you'll need to make sure you keep copies of all of your 1099 forms, as well as business bank statements. If you sell physical items, you might want to keep receipts that show how much inventory you ordered, as well as proof of how many items you sold.

Do I need an EIN to file a Schedule C?

If you are a sole proprietor, or a married couple operating a business together, you do not need an EIN to file your Schedule C form. You only need an EIN if you have a qualified retirement plan, have any employees, or need to file excise, alcohol, tobacco, or firearms returns, or if you pay out gambling winnings.

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  1. IRS. "Instructions for Schedule C Profit or Loss From Business." Page 2.

  2. IRS. "Schedule C Profit or Loss From Business."

  3. IRS. "Instructions for Schedule C - Line A."

  4. IRS. "Election for Married Couples Unincorporated Businesses."

  5. IRS. "Instructions for Schedule E."

  6. IRS. "About Form 461, Limitation on Business Losses."

  7. IRS. "About Form 3800, General Business Credit."

  8. IRS. "About Form 4562, Depreciation and Amortization (Including Information on Listed Property)."

  9. IRS. "Instructions for Schedule C - Line D."

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