Business owners must file Schedule C, Form 1040, Profit or Loss From Business if the business engaged in an activity for income or profit and is actively involved in the activity regularly and continually, notes the Internal Revenue Service (IRS). The form is for businesses operated as sole proprietorships. People with hobbies or sporadic activity do not qualify as businesses, and income from those types of nonbusiness activities are reportable on Line 21 of Form 1040 without filing a Schedule C.Continue Reading
Schedule C is also used to report expenses and wages earned as a statutory employee, reports the IRS. In addition, taxpayers use Schedule C to report deductions and income from qualified joint business ventures and certain types of income that shown on Form 1099-MISC, Miscellaneous Income.
Small businesses with expenses less than $5,000 can sometimes use Schedule C-EZ in lieu of the longer standard form, Schedule C, reports IRS.gov. In addition to filing Schedule C, business owners may need to file other schedules to properly report income and taxes paid, including Schedule A, which is a form used to deduct taxes, interest and casualty losses; Schedule F, to report losses and profits from farming activities; and Schedule SE, necessary to pay self-employment tax on business income.Learn more about Taxes