Running your own business is never easy and the IRS does their best to add to those challenges. One of the key requirements? Filing a Schedule C with your 1040.
You need to use Schedule C when conducting business as a sole proprietor or independent contractor and filing an income tax return in April. The Schedule C reports the income and expenses of your business activity.
With Schedule C you are reporting all of your business income, from all sources, as well as the various business expenses, calculating a net profit or loss for the business. That net profit or loss is carried to Form 1040 and reported to the IRS (don't worry, your tax software or professional will do it for you). Outright is going to create it for you, automatically, saving time and money with a bookkeeper as you'll have your ready come tax time.
With various sources of income and a laundry list of expense categories, the Schedule C might be one of the most confusing IRS forms. Sure, it's simple enough but what do you do with "Depletion?!" Feeling confused? We're here to help with an army of professionals ready to answer any questions you might have.
Did you know?
The IRS may consider your business to be a hobby if you lose money year after year. While the losses are discouraging, worse is that you may lose the tax benefits of your business losses; the IRS will disallow your Schedule C losses once they decide your business is really just a hobby. Any profit is then reported as "Other Income" on Form 1040 (line 21) while the losses are no longer reported on your tax return.