Tax
Schedule C
The form a sole proprietor files with their personal return to report a business’s income and expenses.
Also called Form 1040 Schedule C, Profit or Loss From Business.
Schedule C is not a separate return. It attaches to the Form 1040 you were going to file anyway, and its bottom line, net profit, flows onto that return as income. This is why a freelancer files one return rather than two.
The form is organised by line, and the lines are specific: advertising is 8, car and truck expenses 9, contract labor 11, office expense 18, travel 24a, meals 24b. An expense does not become deductible by being business-related; it becomes deductible by belonging to a line.
Net profit from Schedule C is also the figure self-employment tax is computed from, which is why a deduction is worth more than the income-tax rate alone suggests.
In Contha
Contha puts each business charge on a real Schedule C line as it lands, rather than in a category that has to be mapped to one in March.
Related
Terms that come up beside this one
Self-employment tax
Social Security and Medicare tax paid by someone who works for themselves, covering both the employee and employer halves.
Sole proprietorship
A business owned by one person that is not legally separate from that person.
Qualified business income deduction
A deduction of up to 20% of qualified business income, available to owners of pass-through businesses.