IRS Schedule C must be filed by individuals who operate a trade or business and report that activity as part of their individual income tax return. Whether Schedule C is required depends on how the activity is classified under federal tax rules, not on the size of the business or the amount of income earned.
General Rule for Filing Schedule C
You generally need to file Schedule C if you carry on a trade or business as an individual and are not operating through a partnership or corporation. In this case, business income and expenses are reported directly on Form 1040 using Schedule C rather than on a separate business return.
Sole Proprietors
Sole proprietors use Schedule C to report income and expenses from a business they own and operate themselves. This includes individuals conducting business under their own name or under a registered business name. More detail on this reporting structure is provided in Schedule C and Sole Proprietorship Reporting.
Single-Member LLC Owners
Owners of single-member limited liability companies generally file Schedule C when the LLC is treated as a disregarded entity for federal tax purposes. In this situation, the business activity is reported on the owner’s individual return rather than on a separate entity-level return. Additional explanation is available in Single-Member LLC Treatment Under Schedule C.
Statutory Employees
Certain statutory employees are required to use Schedule C to report income and expenses related to their statutory employee work, even though they may receive a Form W-2. This classification applies only in specific circumstances defined by federal tax law. More information is provided in Statutory Employee Income and Schedule C.
When Schedule C Is Not Used
Schedule C is not used to report wage income, rental or royalty income, farming income, or business activity conducted through partnerships or corporations. These types of income are reported using different schedules and forms. Structural differences are explained in Schedule C vs Schedule E and Schedule C vs Schedule F.
Special Situations
In some cases, Schedule C may be filed even if a business has no income for the year. How no-income situations are treated is explained in Schedule C With No Income. Filing timing considerations are covered in Schedule C Due Date.
Schedule C Overview and Reference
A complete practical overview of Schedule C, including how it is filed and completed, is available in IRS Schedule C Overview. The official form and instructions issued by the Internal Revenue Service are available in the reference entry at IRS Form 1040 Schedule C.