What is a Schedule C (Form 1040)?

Taxpayers who operate sole proprietorships must use Schedule C (Form 1040) to report their profits and losses. Sole proprietors who have employees and offices can still use the schedule, according to TurboTax. Business owners who operate their companies as corporations or partnerships use different reporting forms.

Some sole proprietors can use Schedule C-EZ, which requires less information, notes TurboTax. The shorter schedule applies to profitable small businesses that do not have employees, inventory or more than $5,000 of business expenses. Most taxpayers who file Schedule C (Form 1040) also must file Schedule SE to calculate and pay their self-employment taxes.