1040 Schedule C: How the IRS Works for Your Small Business
This post was updated in April 2018
So you’ve started a small business: you might be freelancing, selling homemade soap at craft fairs, building state-of-the-art dog houses, or serving up the best grilled cheese sandwiches in the city. Whatever your small business involves, come tax-time you’ll identify as self-employed with the IRS.
You’ll need to fill out Form 1040 Schedule C, also known as a Profit or Loss from Business form, which will detail your overall financial status as a sole proprietor. This form is designed for those folks that are just getting their business’ started, have made little money, or even calculated an overall loss for the year.
Hopefully, throughout 2017 you’ve kept careful records of your business income and expenses, as well as your personal financial information. Keeping your receipts, bank statements, and other files organized makes filing your taxes at the end of the year much easier as all the numbers you need will be readily available.
Some small business owners and sole proprietors choose to file the 1040 Schedule C form once a year, but many file this form and pay their taxes on a quarterly basis. Breaking the tax up into smaller, more manageable chucks can make the process a whole lot less daunting.
Need a little step-by-step instruction to get you going? Watch this video: