Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21.
Also, use Schedule C to report (a) wages and expenses you had as a statutory employee, (b) income and deductions of qualified joint ventures, and (c) certain income shown on Form 1099-MISC, Miscellaneous Income. See the Instructions for Recipients (back of Copy B of Form 1099-MISC) for the types of income to report on Schedule C.
Small businesses and statutory employees with expenses of $5,000 or less may be able to file Schedule C-EZ instead of Schedule C. See Schedule C-EZ for details.
You may be subject to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more information.taxmap/instr/i1040sc-000.htm#TXMP31456556taxmap/instr/i1040sc-000.htm#TXMP1382ff70
Single-member LLCs that are disregarded as entities separate from their owner for federal income tax purposes are now required to file employment tax returns (effective for wages paid on or after January 1, 2009) using the LLC's name and employer identification number (EIN) rather than the LLC owner's name and EIN. This new requirement to use the LLC's name and EIN also went into effect for certain excise tax returns beginning in 2008. Single-member LLCs not previously needing an EIN may now need to obtain an EIN for the payment and reporting of these taxes. For more information, see the Instructions for Form SS-4.taxmap/instr/i1040sc-000.htm#TXMP632c0fb0
The dollar limit for the section 179 deduction to expense certain depreciable business property is $250,000 for property placed in service in 2009. This limit will be reduced when the total cost of section 179 property placed in service during the tax year exceeds $800,000. For more information, see Pub. 946.taxmap/instr/i1040sc-000.htm#TXMP226b6d3d
For qualifying property acquired and placed in service in 2009, you may be able to take a depreciation deduction equal to 50% of the adjusted basis of the property. Qualifying property includes certain property with a recovery period of 20 years or less, certain computer software, water utility property, or qualified leasehold improvements. For more information, see Pub. 946.