Ekue
Who files Schedule C
Schedule C (Form 1040), Profit or Loss From Business, is where a sole proprietor reports business income and expenses. A single-member LLC files it too, unless it has chosen to be taxed as a corporation. Partnerships and multi-member LLCs file Form 1065, and S-corps file Form 1120-S, instead.
The shape of the form
Part I is income: what you were paid (line 1), less returns and allowances, less cost of goods sold if you sell products. Part II is expenses, one line per kind. The line totals are what your bookkeeping has to produce. The most common for a service business:
| Line | What goes there | Examples |
|---|---|---|
| 8 | Advertising | Ads, business cards, website promotion |
| 9 | Car and truck expenses | Business miles or actual vehicle costs |
| 10 | Commissions and fees | Card processing fees, platform fees |
| 11 | Contract labor | Freelancers and contractors you paid |
| 13 | Depreciation | Equipment written off over several years |
| 15 | Insurance (other than health) | Liability, professional indemnity |
| 17 | Legal and professional services | Your tax agent, a lawyer |
| 18 | Office expense | Postage, small office items |
| 20 | Rent or lease | Studio or equipment rent |
| 22 | Supplies | Materials used up in the work |
| 23 | Taxes and licenses | Business licences, some state fees |
| 24 | Travel and meals | Business travel; meals usually only partly deductible |
| 25 | Utilities | Phone and internet used for the business |
| 27a | Other expenses | Software subscriptions, bank fees, training |
This is a guide to keeping records, not tax advice. What is deductible, and how much, depends on your situation; your tax agent has the final word.
Give every category a line
The easiest books to file from are ones where every expense category already points at a Schedule C line. Then the year-end total for "Software" lands on line 27a without anyone re-sorting a spreadsheet. Ekue starts every business with a category list mapped this way; you can rename categories or remap them, and the mapping follows.
Cash or accrual
Most small businesses file on the cash basis: income counts when the money arrives, expenses when you pay them. Accrual counts an invoice when you send it and a bill when you receive it. Keep both dates on every record, the document date and the payment date, and you can run either. Ekue does, so a report can switch between the two without re-entering anything.
Keep the receipt with the expense
A deduction is only as good as its proof. Attach the receipt or the bill to the record it supports, at the time you enter it. A shoebox of paper sorted in March is how deductions get lost.
Reconcile every month
Once a month, check your books against the bank statement: the closing balance in your books should equal the statement's. When it does, lock those entries so a later edit can't quietly change a period you've already checked.
What to hand your tax agent
- Profit and loss for the year, on the basis you file
- A Schedule C summary, line by line
- Balance sheet at year end
- 1099-NEC totals for contractors you paid
- Transaction detail, and every receipt
Ekue puts all of that in one download, the year-end pack.