The lines most small businesses use
| Schedule C line | What goes there | Examples |
|---|---|---|
| 8 Advertising | Getting customers | Google Ads, Facebook ads, door hangers, yard signs, business cards |
| 9 Car and truck | Vehicle use for business | Mileage deduction, or actual costs; plus business tolls and parking |
| 11 Contract labor | People who are not employees | A helper paid for a day, a subcontractor (1099s may be required) |
| 15 Insurance | Business insurance | General liability, commercial auto, equipment coverage |
| 17 Legal and professional | Outside professionals | Accountant, tax preparer, lawyer |
| 18 Office expense | Running the office | Printer ink, paper, postage, small office supplies |
| 20 Rent or lease | Renting equipment or space | Trailer or lift rental, a storage unit, studio rent |
| 21 Repairs and maintenance | Fixing business equipment | Saw repair, sharpening, fixing a sewing machine |
| 22 Supplies | Things used up on the job | Materials, small tools, wax, fabric, packaging |
| 23 Taxes and licenses | Business taxes and permits | Business license, seller's permit, some local fees |
| 24a Travel | Overnight business trips | Hotel and airfare for a trade show |
| 24b Meals | Business meals | Lunch with a client: usually 50% deductible |
| 25 Utilities | Business utilities | Business phone line, internet for the business |
| 27a Other expenses | Everything else ordinary and necessary | Software, bank and card fees, Etsy fees, dump fees |
Bigger equipment (a mower, a pressure washer, a laptop) may need to be depreciated or expensed under special rules, which is Line 13. Ask your tax preparer how they want those listed.
Business meals are only half
A $60 lunch with a property manager is usually a $30 deduction. Log the full $60 so your books match your bank account, and mark it as a meal so only half is counted for tax.
What is not a business expense
- Paying yourself. Owner draws are not an expense for a sole proprietor; your profit is your pay.
- Personal spending put on the business card. Move it out of the books.
- Commuting to a regular workplace.
- Fines and penalties, including parking tickets.
- Everyday clothes, even if you wear them to work. Safety gear and uniforms with a logo are different.
Make it a habit, not a project
Give every receipt a category the day you pay it and keep the receipt (a phone photo works). At the end of the quarter, total each category, and you have both your profit and most of your Schedule C. Then use the free self-employment tax calculator to see what to set aside.
General information for US sole proprietors, not tax advice. Your tax preparer may categorize some items differently.
