Schedule C, Profit or Loss from Business

This form is used by sole proprietors (i.e., individuals who own their own businesses) to report income or loss from their business operations.

  • Part I - Income: All the money your business made during the tax year. This includes both cash and non-cash income.

  • Part II - Expenses: Lst the costs of doing business. These are all subtracted from your income.

  • Part III - Cost of goods sold: Calculate the cost of all goods sold during the year, which is also subtracted from your income. This involves listing your inventory at the beginning of the year, new purchases, and your inventory at the end of the year.

  • Part IV - Information on your vehicle: If you're claiming vehicle expenses, you'll need to provide information about your vehicle and its business use here.

  • Part V - Other expenses: Any business expenses that didn't fit into the categories in Part II.

After you've filled out all the relevant parts of Schedule C, you figure out your net profit or loss (your income minus your expenses and cost of goods sold) and report this on your Form 1040.