A Schedule 1040C is the form for an individual business or sole proprietorship. This is for people who work for themselves and are the only owner of a business(s). If you file a Section C, you are able to write-off expenses that are related to your “business”. Usually this means you will be able to write off entry fees (very useful), office supplies, computer hardware, business travel, a portion of your rent (if you have a space in your house dedicated to your business) and various entertainment items (food, business presents). This can tally up for a decent amount of write-offs. You must keep receipts, logs and proof of all your deductions, so don’t go try writing off a new porch.
The bad part about a Schedule C is that you have now declared yourself self-employed and will now need to pay self-employment tax, which is 15%. Self-employment is pretty much unemployment and social security rolled up into one. So, there are a number of factors to consider before running to your government office to file for a business license.
The smartest thing is to talk to a CPA before you attempt anything and get things straightened out by them. They’ll be able to help you far more than a website like this will.
