What Is A Schedule C On 1099 NEC? - The Full Guide


Being an independent contractor can make life and work much easier in some respects, but it certainly doesn’t help when it comes time to fill out your income tax return. 

If you’re a 1099 contractor, you must fill out an IRS form 1040 to report your income - but there’s more to it than that. 

As part of this return, you must also report relevant business expenses on schedule C and this can get a little complex. So, we’ve written this handy guide to try to clear up some of the confusion and get you back on track. 

Table Of Contents

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What Is A Schedule C?

A schedule C is used by independent contractors to report their business income. If you are a sole proprietor or a 1099 contractor, you have to file a schedule C along with your taxes. 

Your schedule C form will be partnered with your 1040 and this will report your business expenses, business income, profits and losses.

If you work in a sharing economy or as an independent contractor, then the associated business must have the expenses declared. Examples of this are as Uber drivers or freelance work. 

A Schedule C is one of the most important tax forms to complete for a business owner or sole proprietor. After your calculation of expenses and income, the form will show your profits and losses. 

As usual, any profits will have income tax applied, but also self employment tax. Regardless if you did not make a profit however, you still are required to report the figure. 

The 1040 form will include any further income including deductions and credit which will determine how much income tax to be paid. 

The Difference Between A Schedule C And Business Tax Return 

Schedule C works as part of your individual tax return which is where the business displays its income and expenditure, but it’s not really a separate business return. 

A separate business return will be necessary however if your business is filed as an S-Corporation or you’re in a partnership. 

This is then filed aside and then attached with a Schedule K-1. There is an advantage to this, especially if your business is audited by the Inland Revenue Service, because they will only request to see your business returns. 

Whereas, if you are a Schedule C filer, the Inland Revenue Service will lump them together and you will have to provide your personal return. 

Also read: What Is A 1099 Misc Form?

Who Must File A Schedule C?

A Schedule C is primarily for sole proprietors. In other words, this is a business that you solely own but it isn’t a specific business type which is registered in your state. 

However, if you are a single member LLC, you will also have to fill out a Schedule C. The Inland Revenue Service say that you have to report a Schedule C to:

Report income, profit or losses as a sole proprietor with a business or profession operated by you. 

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What Do I Have To Do With A Schedule C?

Luckily, filling out a Schedule C isn’t too complicated but it is critical that a small business owner gets it 100% right. 

In order to ensure you’ve completed everything correctly, you need to make sure that you are entirely organized and ready.

Ensure you’ve collated all of your relevant business documents such as:

  • Profit and loss 

  • Mileage track

  • Expenses 

  • Assets 

Once all of your business documents are in order, you can begin the process of filling out your Schedule C. 

The first thing to do is to calculate how much business income you have received. There are plenty of ways to do this, but if you wish to - you can use a third party app or service to calculate this for you. 

There may be a small fee incurred, but you will not have the headache and worry of doing it yourself. 

Make sure you’ve included gross earnings because commissions will be removed when you come to the expenses part of Schedule C. 

A basic guidance is thus: 

  1. Add total income 

  2. Minus returns, allowances and goods’ costs 

  3. Add any other income 

What About Deductions?

There are a number of business expenses which are deductible. These may include, but are not limited to:

  • Vehicle expenses 

  • Insurance for your business 

  • Marketing costs 

  • Travel 

  • Service expenses 

  • Professional expenses 

  • Food 

  • Depreciation

  • Interest (mortgage) 

  • Postage and packaging 

  • Repairs 

Schedule C will outline what line certain expenses such as cell phone costs should be placed on. Ensure that you are following all the guidance correctly, as this may affect your application. 

Also read: Who Gets A Form 1099-MISC? 

Filing A Schedule C As An Independent Contractor 

Once again, being prepared and organized is critical when it comes to filling out a Schedule C. As an independent contractor, you will be filing a Schedule C along with your individual tax return. 

It’s advised that you have a good accounting system in place to help you out with all this. There are once again, third party apps and services that can assist you here - but you are entitled to hire a professional or do it yourself, if you wish to. 

Expense tracking is critical for your Schedule C so you need to make sure you’re keeping all receipts and bills. If you use a third party app like QuickBooks for example, you can keep it in one place by photographing the receipts. 

Also read: Filing For Both W2 & 1099

Where Can I Access Help To Fill Out Schedule C?

If you already have a system in place, you should not have to do anything (besides pay their fee of course!). If you need assistance, you should be able to access it with them. 

Aside from this though, you can contact the Inland Revenue Service who should be able to assist you with some of the requests outlined on the form. 

Also read: Report Freelance Salary Without 1099 Form
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The Bottom Line

If you are required to fill out a Schedule C, you need to ensure you’ve done it accurately and in a timely manner. Hopefully, our guide has helped you with some of this!

Payroll will run smoother when forms like the 1099-NEC and pay subs filed away properly. Our pay stub generator produces quality paystubs easily and in a timely manner.

Our 1099 nec form generator is another brilliant form generator which produces 1099 forms hassle free.

Also read: Mail 1099-NEC Forms To IRS

Frequently Asked Questions

Yes, you can deduct home office expenses if you use a portion of your home regularly and exclusively for business.

Yes, if you are a freelancer and earned more than $400 in business income in a tax year.

You can file Schedule C on 1099 NEC by attaching it to your tax return.

No, Schedule C is a form that is attached to a tax return while the 1099 form is a statement of income.

You can deduct expenses that are ordinary and necessary for your business, such as supplies and equipment.

You may face penalties and interest for failing to file Schedule C and pay the taxes owed on your business income.

Schedule C is a form used to report business income as an independent contractor.

Schedule C is a form used to report business income as an independent contractor.

The deadline for filing Schedule C on 1099 NEC is the same as the deadline for filing your tax return.

The purpose of Schedule C is to report the income and expenses of a sole proprietorship business.

The purpose of Schedule C is to report the income and expenses of a sole proprietorship business.

Anyone who is self-employed and earned more than $400 in business income in a tax year.

Anyone who is self-employed and earned more than $400 in business income in a tax year.
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What Is A Schedule C On 1099 NEC? - The Full Guide
Samantha Clark

A Warrington College of Business graduate, Samantha handles all client relations with our top-tier partners. Read More

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