If you make non-W2 income as a sole proprietor it needs to be tracked and included on your tax forms.Ī common mistake is to assume you will receive a 1099-NEC for all of the income you generate. Tracking Income for the Schedule CĬompared to expenses, tracking the income that is reported on your Schedule C is fairly straightforward. On average, our users save $5,600 from their tax bill. Our software scans your bank/credit card statements to discover potential deductions. Note: If you want to skip out on the hassle of using a template, try our 1099 expense tracker to automatically categorize your receipts. For state tax items you should always talk to a professional if you are not familiar with your state tax laws. The below also does not include a state tax-related item specific to your state. It is treated the same a sole proprietorship unless you choose to have it treated as a corporation - which comes with additional rules that need to be followed.

You may also need to file a Schedule C if you are a Single-Member limited liability company (SMLLC) as this type of entity is not treated as a separate entity for federal income tax purposes. It can also be used to report wages/expenses you had a statutory employee and income/expenses of qualified joint ventures.

The Schedule C is used to report the profits or losses related to your business.

This is true regardless of whether you are a full-time solopreneur or are generating income from a side hustle. If you receive a 1099-NEC as a sole proprietor (independent contract), you must fill out a Schedule C when filing your annual tax returns.

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