Schedule C (Form 1040): reporting business income

If you work for yourself or own a single-member LLC, Schedule C is your business tax return. This guide walks through it from the top to the bottom line, including the sections that most often go wrong: cost of goods sold, the home office and the vehicle questions.

By Muhammad Bilal, Chartered Accountant. Reviewed by Mirza Fahad Baig, Chartered Accountant. Checked against official sources on . 3 minute read.

Short answer

Schedule C is the part of Form 1040 where sole proprietors, freelancers and owners of single-member LLCs report business income and expenses. Gross receipts less returns, cost of goods sold and expenses give net profit on line 31, which flows to Form 1040 for income tax and to Schedule SE for self-employment tax. Each business gets its own Schedule C.

At a glance

Who files
Sole proprietors and owners of single-member LLCs taxed under the default rules
Filed with
Form 1040, by April 15
Bottom line
Line 31, net profit or loss
Profit also goes to
Schedule SE, for self-employment tax
Cost of goods sold
Part III, for businesses with inventory
Home office
Line 30, using Form 8829 or the simplified method
Schedule C (Form 1040): reporting business incomeWho files: Sole proprietors and owners of single-member LLCs taxed under the default rules; Filed with: Form 1040, by April 15; Bottom line: Line 31, net profit or loss; Profit also goes to: Schedule SE, for self-employment tax; Cost of goods sold: Part III, for businesses with inventory; Home office: Line 30, using Form 8829 or the simplified method.KEY FACTS AT A GLANCESchedule C (Form 1040): reporting business incomeWho filesSole proprietors and ownersof single-member LLCs taxedunder the default rulesFiled withForm 1040, by April 15Bottom lineLine 31, net profit orlossProfit also goes toSchedule SE, forself-employment taxCost of goods soldPart III, for businesseswith inventoryHome officeLine 30, using Form 8829or the simplified methodChecked against official sourcesTax BakersSchedule C (Form 1040): reporting business incomeWho files: Sole proprietors and owners of single-member LLCs taxed under the default rules; Filed with: Form 1040, by April 15; Bottom line: Line 31, net profit or loss; Profit also goes to: Schedule SE, for self-employment tax; Cost of goods sold: Part III, for businesses with inventory; Home office: Line 30, using Form 8829 or the simplified method.KEY FACTS AT A GLANCESchedule C (Form 1040): reportingbusiness incomeWho filesSole proprietors and owners of single-memberLLCs taxed under the default rulesFiled withForm 1040, by April 15Bottom lineLine 31, net profit or lossProfit also goes toSchedule SE, for self-employment taxCost of goods soldPart III, for businesses with inventoryHome officeLine 30, using Form 8829 or the simplifiedmethodChecked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

Who files Schedule C?

Individuals who run a business as sole proprietors, including freelancers and independent contractors, and owners of single-member LLCs taxed under the default rules. A married couple running a business together may be able to file two Schedules C as a qualified joint venture instead of a partnership return. A person with two separate businesses files a Schedule C for each. See sole proprietor taxes. Multi-member LLCs file Form 1065 instead.

What goes at the top?

  • Lines A to E: the business activity, its code, business name, EIN if it has one, and address.
  • Line F: accounting method, usually cash for small businesses.
  • Line G: whether you materially participated. This matters if the business makes a loss.
  • Line H: whether you started or acquired the business this year.
  • Lines I and J: whether you made payments requiring Forms 1099, and whether you filed them.

How is income reported? (Part I)

Line 1 is gross receipts: everything the business took in from sales and services, including amounts shown on Forms 1099-NEC and 1099-K. Line 2 deducts returns and allowances. Line 4 deducts cost of goods sold from Part III. Line 6 adds other business income. The result on line 7 is gross income. See Form 1099-K for how platform payments fit in.

Which expenses go where? (Part II)

LineExpense
8Advertising
9Car and truck expenses, standard mileage or actual
11Contract labor
13Depreciation and Section 179, from Form 4562
15Insurance, other than health insurance
16Interest on business loans and cards
17Legal and professional services
18Office expense
20Rent or lease of vehicles, equipment or property
22Supplies
23Taxes and licenses
24a and 24bTravel, and deductible meals, generally at 50%
25Utilities
26Wages paid to employees
27aOther expenses, listed in Part V

What is deductible, and the 2026 limits, are in deductible business expenses. The owner's own draws are never an expense.

How does cost of goods sold work? (Part III)

Businesses that sell products work out cost of goods sold as opening inventory, plus purchases, labor and materials, minus closing inventory. Only the cost of the goods actually sold is deducted. Stock still on hand at year end is carried into next year. See Amazon FBA taxes for how this works for marketplace sellers.

How is the home office claimed?

On line 30, either with the simplified method, $5 per square foot of qualifying office space up to 300 square feet, or with the actual-cost method on Form 8829. The space must be used regularly and exclusively for the business.

Under the regular method, the deduction is worked out on Form 8829.

What is Part IV?

Information about the vehicle behind line 9: when you started using it for business, business, commuting and other miles, and whether you have written evidence. Keep a mileage log, because the IRS asks directly whether you have one. See standard mileage vs actual expenses.

Where does the profit go?

Line 31 net profit goes to Schedule 1 of Form 1040 as business income, to Schedule SE for self-employment tax, and into the qualified business income deduction calculation on Form 8995. A net loss can offset other income, subject to the at-risk and passive activity rules and the limit on excess business losses.

Net profit then feeds Schedule SE for self-employment tax.

When is it filed?

With your Form 1040, by April 15, 2027 for tax year 2026. A Form 4868 extension moves the filing date to October 15, but tax is due by April 15. See how to file taxes as a freelancer.

Want your Schedule C prepared?

We prepare Schedule C from your books, claim every expense you are entitled to, and complete Schedule SE and the QBI deduction with it.

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Questions people ask

Who needs to file Schedule C?

Sole proprietors, freelancers and independent contractors, and owners of single-member LLCs taxed under the default rules.

Does a single-member LLC file Schedule C?

Yes, if it is taxed under the default rules. Its income and expenses go on the owner's Schedule C.

Where does Schedule C net profit go?

To Schedule 1 of Form 1040 as business income, and to Schedule SE for self-employment tax.

Do I file a separate Schedule C for each business?

Yes. Each separate business activity gets its own Schedule C.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IRS: About Schedule C (Form 1040)
  2. IRS Publication 334: Tax Guide for Small Business
  3. IRS Publication 587: Business Use of Your Home
  4. IRS: About Schedule SE (Form 1040)

Rules and fees change. If you are reading this long after September 30, 2026, confirm the figures with the source before you rely on them.

Business tax by entity typeBusiness expenses you can deduct: a working listFreelancers and self-employedSelf-employment tax explainedFreelancers and self-employedHow to file taxes as a freelancer: a first-year guide

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This guide is general information. It is not tax or legal advice for your situation.