Schedule C

Profit or Loss from Business is an Internal Revenue Service (IRS) tax form that is used to report income and expenses for a business. Schedule C must accompany Form 1040, which is a taxpayer's main tax return.

• Self-employed individuals, sole proprietors of a business, or a single-member limited liability company (LLC) must report any activity conducted for income or profit using Schedule C. The resulting profit or loss calculations are commonly considered self-employment income.

  • Schedule C is a tax form used to report business-related income and expenses.

  • This schedule is completed by self-employed individuals, sole proprietors, or single-member LLCs.

  • A business expense must be ordinary and necessary to be listed as a tax deduction on Schedule C.

  • The taxpayer uses Schedule C to calculate the business’s net profit or loss for income tax purposes. Schedule C must be filed with Form 1040.

• What are the benefits of a C Corp?

  As a business owner of a C corp, one of the first things you’ll want to know is how it can benefit you. Owning a C corp offers benefits that can protect you and your members:

  • Limited liability protection

  • Longevity - Tax benefits

  • Tax deductions

  • Limited liability is the first benefit of a C corp. The limited liability protection that a C corporation offers means that owners aren’t personally liable if the corporation experiences debt or losses. It also means that the owner’s personal assets are protected from creditors. Only what a business owner invests in their corporation is at risk if the corporation incurs legal trouble. The second benefit of a C corp is how long the corporation lasts. Unlike other business entities, it is easier for shareholders to raise money for their C corp. It is also easier for C corps to be sold because the corporation’s worth doesn’t include the owner’s value. C corps can receive tax benefits. This will help members, called shareholders, to pay their taxes at a lower rate potentially. The final benefit of C corps is their tax deductions. Owners and shareholders can qualify for several tax deductions. Corporations can receive tax deductions for the following:

  • Bad debts

  • Charity donations

  • Compensation of officers

  • Depreciation

  • Employee benefit plans such as insurance and pensions

  • Rents

  • Repairs and maintenance

• Positive attributes:

  • Tax Savings: One of the best features of the S Corp is the tax savings. While members of an LLC are subject to employment tax on the entire net income of the business, S Corp shareholders/employees are subject to employment tax only on their wages. The remaining income is paid to the owner as a "distribution," which is taxed at a lower rate, if at all.

  • Business Expense Tax Credits: Some expenses that shareholder/employees incur can be written off as business expenses.

  • Independent Life: If a shareholder leaves the company or sells his or her shares, the S Corp can continue doing business relatively undisturbed.

• What Are the Downsides to a C Corp?

  While forming a C corp has its benefits, you’ll also need to know about the downsides of forming one. There are three downsides to forming a C corp:

  • Costs

  • Double taxation

  • Paperwork

• There are more factors to consider when setting up a C corp.

  • You’ll need to allocate money for the Articles of Incorporation and licenses.

  • Double taxation occurs when the corporation pays taxes on its earnings as the first form of tax payment. This tax is a federal tax.

  • The second form of tax payment occurs when individual shareholders are subject to taxes at an individual rate on their personal tax returns.

  • The final downside to C corps involves the required paperwork. Directors and shareholders in a C corp must hold at least one meeting annually.