Schedule C Profit or Loss from Business


This is Jean Wetzler. I’m talking with Anna
Mayr from the Small Business/Self-Employed division about Schedule C. Anna, what is a Schedule C and who needs to
file it? Schedule C is the federal tax form filed by
most sole proprietors; one owner businesses. As you can tell from its title, Profit or
Loss from Business, it’s used to report both income and losses. Many times, Schedule C
filers are self-employed taxpayers who are just getting their business started. In addition
to those who do well at the start, this group can also include new business owners who make
very little or no profits, or even lose money. There is also a shorter form, Schedule C-EZ,
Net Profit for Business. This is for self-employed individuals with less complex situations including
business expenses of less than $5,000, no net losses and no employees. What is the process for filing a Schedule
C? The process actually starts when the business
does with good recordkeeping. That will ensure the business owner has everything he or she
needs when it comes time to file a tax return. Schedule C is filed annually as an attachment
to Form 1040, the individual tax return. The quickest, safest, and most accurate way to
file is by using IRS e-file, either online or through a tax professional who is an authorized
IRS e-file provider. So in addition to filing electronically and
keeping good records, do you have any other tips for Schedule C filers? Start making quarterly, estimated payments
to cover your income tax and social security self employment tax. You can make deposits
electronically, using the Electronic Federal Tax Payment System, EFTPS. If you have workers,
classify them properly as employees or independent contractors. This is determined by law not
the choice of the worker or the business owner. Be sure to deposit your federal employment
taxes on time. Put a plan in place to protect your financial and tax records and help you
recover quickly in the event of a disaster. And steer clear of abusive tax avoidance schemes. Where can a new business owner get more information? Whether you’ve been in business for a while
or are just getting started, our Website has a wealth of information. Go to IRS.gov/smallbiz
(with a “z”) for starters. You can browse through the information online, order free
tax publications and products, or take a small business tax workshop. Thank you, Anna. I’ve been talking with Anna Mayr of the IRS.
This is Jean Wetzler.

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