Schedule C is the IRS form where a sole proprietor reports business income and expenses. It is attached to your Form 1040. You do not need an LLC or an EIN to use it — most first-timers file with their SSN.

The formula

Gross income − Business expenses = Net profit (or loss)

That net profit flows to your 1040 for income tax, and to Schedule SE for self-employment tax.

Part I — Income

Add up: 1099-NEC Box 1 amounts, platform payouts, cash, checks, and app payments for services — even if no form was sent. Subtract returns/refunds if any. This is your gross receipts, not your profit.

Part II — Expenses, by category

Common lines for freelancers: advertising, car/truck expenses, commissions/fees, insurance, legal/professional services, office expense, rent/lease for business space, supplies, taxes/licences, travel, meals (with limits), utilities, and “other expenses” with a description.

Do not force an expense into the wrong line to make it fit. Use “other expenses” and label it clearly — for example, “Software subscriptions — design tools.”

Part III and beyond

Part III is for cost of goods sold — most service freelancers leave it blank. Later parts cover vehicle information, home-office information, and other details. If you claim a home office or vehicle, read those guides before you file; the method you choose affects the calculation.

Three beginner traps

  1. Reporting gross 1099 totals as profit — you pay tax on profit, not gross, if you have legitimate expenses.
  2. Forgetting income with no form — cash and app income still belongs on Schedule C.
  3. No records — an expense without a receipt, invoice, or log is hard to defend.

Next: The Complete First 1099-NEC Guide · Freelancer Deductions Checklist · Self-Employment Tax, Explained

Educational only. General information for beginners, not tax advice. Verify current rules on IRS.gov or with a qualified professional.