A profit and loss form is also known as a Schedule C and is used by sole proprietors, independent contractors and a single owner of a limited liability corporation. The form is used when filing income taxes and reports a business’ annual profits and losses to federal and in some cases, state and local governments.
Items you will need
- Schedule C Form
- Profit and loss statements
Download the Schedule C Form. This form can be found at http://www.IRS.gov/pub/IRS-pdf/f1040sc.pdf.
Fill in your personal information in lines A through H. In this section, the form is asking you basic information such as your name, social security number, address and business name. This section will also ask basic information about the business including a brief description, the business' method of accounting and finally if the business was established during the past year. .
Record any monies that your company earned in Part I, Income. Using your profit and loss statements for the year, fill in your total sales on line 1. On line 2, enter any returns your business had. Then, subtract line 2 from line 1 and enter this amount on line 3. If your business sells a tangible product, fill in your cost of goods sold on line 4. Enter your gross profit in line 5 only if you sell a physical product and filled in line 4. Use line 6 to reflect other income. Add lines 5 and 6 to reflect gross income on line 7.
Record any costs to your business in Part II, Expenses. Refer to your profit and loss statements to fill in this section, which documents the operating costs of your business.
Document the cost of producing goods in Part III, Cost of Goods Sold. This section must only be filled out if you are selling a physical product. If your business provides a service, it is not necessary to complete this section.
Fill in Part IV, Information on Your Vehicle, if you must claim expenses of a car or truck on line 9 in Part II, Expenses.
Record any other costs that your business incurred in Part V, Other Expenses. This information should be totaled in line 48 and also entered on page 1, line 27 of Form 1040.
Although you can refer to your profit and loss statements, it is also important to have copies of paid expenses as well as income generated by your company.
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