For small business owners and the self employed, perhaps the most important form on their tax return is Schedule C, where income and expenses are reported and the profit and loss of a business are calculated.
If you are a sole proprietor, all of your income and expenses relating to your business are reflected on this schedule.
This schedule is more straightforward than many forms you
need to file your tax return. But it does require supporting schedules for common items like the home office deduction, Section 179 and depreciation expenses, and vehicle expenses. These items are calculated on separate forms and schedules, and then the appropriate amounts are included on Schedule C.
One of the things you may find most challenging is deciding upon the appropriate business activity code which must be included on Schedule C. As the business owner, the IRS allows you considerable latitude in determining the business activity code that most closely matches your business.
What you must take care of, however, is that if you have businesses that generally or primarily engage in different activities, you are required to file a separate Schedule C for each business activity. You are not required to file a separate Schedule C for an activity that is merely incidental to the primary business activity.
For example, if your principal business activity is a property manager of real estate, and you are a licensed real estate agent who occasionally receives a commission for your work as an agent - you would not need to file a separate Schedule C unless your agency acted entirely independently from the property management business.
You'll find everything you need at Turbo Tax Online to help you prepare and file your taxes online.
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