J.K. Lasser's Guide to Self-Employment: Taxes, Tips, and Money-Saving Strategies for Schedule C Filers

CHAPTER 3

Using Schedule C

Tax Filing on Schedule C

When, Where, and How to File

What's Ahead

As a self-employed person without any co-owners, your annual business tax return is not a standalone filing. Instead, your business return is part of your personal income tax return.

Who are Schedule C filers? According to recent IRS statistics, the largest sectors in terms of the number of returns are the professional, scientific, and technical services sectors. The second largest sector for Schedule C filers is other services, such as personal services and laundry services. Within this sector, the greatest increase in returns is found within health care and social assistance. Other sectors include construction, merchant wholesalers, retail, and the performing arts. Whatever sector your business activities fall in, there's some basic information you should know about Schedule C.

Tax Filing on Schedule C

Partnerships, limited liability companies, and corporations (both C and S) have their own separate tax returns. These returns are filed independently from the returns of their owners. But as a self-employed person, you must file Schedule C, Profit or Loss from Business (or Schedule C-EZ, Net Profit from Business) with your personal income tax return, Form 1040. Your business form is not filed independently from your personal return. And because you file Schedule C, you cannot use either of the shorter income tax returns, Form 1040A or 1040EZ, as your personal income tax return.

Schedule ...