Schedule C is the IRS form where you report the income and expenses from a business you operate as a sole proprietor. It gets attached to your personal tax return (Form 1040), and the net profit or loss flows directly into your personal income. If you’re self-employed, freelancing, running a side gig, or operating a single-member LLC that hasn’t elected a different tax status, this is the form the IRS expects to see.

The filing threshold is low. If your net self-employment income for the year exceeds $400, you need to file Schedule C. That’s net income after expenses, not gross revenue. Even if you have a full-time W-2 job and just do some consulting on the side, that side income goes on a Schedule C.

Your business structure determines whether Schedule C applies to you. Sole proprietors and single-member LLCs (without an S-corp or C-corp election) use Schedule C. Partnerships and multi-member LLCs file Form 1065 instead. S-corporations file Form 1120-S. C-corporations file Form 1120. If you’ve set up one of those other entity types, your business files its own separate return and Schedule C doesn’t come into play.

The form covers your gross revenue at the top and then lists out all your deductible business expenses. Advertising, vehicle costs, insurance, office supplies, rent, utilities, contractor payments, home office, and more. The bottom line is your profit or loss. That number gets taxed as regular income, and on top of that you’ll owe self-employment tax at 15.3% for Social Security and Medicare. That self-employment tax catches a lot of first-time filers off guard because it’s on top of your income tax.

Common mistakes include not tracking expenses during the year and then guessing at tax time, forgetting about deductions like mileage or software subscriptions, and mixing personal and business spending so heavily that nothing is clear. These problems either cost you money through missed deductions or create risk if the IRS asks questions. Having clean books through full-service bookkeeping throughout the year makes Schedule C filing straightforward instead of stressful.

If you’re filing Schedule C and your business is growing past the early stages, it’s also worth evaluating whether sole proprietorship is still the right structure. At a certain income level, electing S-corp status can save you thousands in self-employment tax annually. That kind of planning is where CFO services for small businesses really pay for themselves. The goal is making sure your tax structure keeps up with your business instead of costing you more than it should.