This document provides guidance on completing Schedule C (Form 1040) for a small business. It explains key parts of the schedule including income lines, cost of goods sold, expenses, and transferring amounts to Schedule 1. The document outlines how to use a profit and loss report to fill out the expense portion. It also briefly discusses the qualified business income deduction that may be available if the business had a profit.

1. SCHEDULE C
BUSINESS
Benefits • Maximize Deductions • How-to

2. The 1040
◦ This is what everyone’s
personal income tax
return looks like.
◦ This is the first page
which contains personal
information.

3. Page two is where all the
amounts of your
income and expenditures
from different situations
are combined and listed.
These amounts come from
Schedules, worksheets.

4. The Schedule C
The worksheet for your small business

5. The Top Lines of the Schedule C
Cash vs Accrual
◦ Cash accounting recognizes revenue and expenses
only when money changes hands
◦ Accrual accounting recognizes revenue when it's
earned, and expenses when they're billed (but not
paid).
◦ Most small businesses such as Valentus are CASH
What’s My Number?
If not a corporation or partnership, and you DON’T have
employees (contractors not employees) you don’t need an
Employer ID number (EIN). Your SSN will suffice.
B. Google IRS activity codes. Use 999999 if unsure.

6. Income Portion L I N E S
1. Gross Receipts – these are
your sales. 6 days, your 1090
from Valentus – any funds
received for your product.
2. These are any refunds you
gave.
3. It’s your Sales minus refunds.
4. Cost of Goods (or COGS) –
please see next slide (7) for
information.
5. You subtract COGS from
Sales to get your Profit.
6. This is not filled out in a
Valentus scenario.
7. This is ALL the income you
have earned

7. COGS (Line 4 of Income)
L I N E S
33. Usually a. Cost
34. Usually not
35. Beginning inventory ($600 in
samples, $600 in product)
36. This is if you withdraw
inventory for private use
37. This is CONTRACT labor.
You are unlikely to use this in
Valentus.
38. This can supplies for booths,
shows, etc.
39. Rarely used
40. Add them up!
41. Ending Inventory ($100 on
samples, $250 in product)

8. 2nd Half of Sch C
We will be using the next slide to
obtain our information for this
section.

9. Profit & Loss
Use a P&L report to fill in the
expense portion of your Sch C

10. “Other”
This total amount will be added
to Line 27a on the Sch C.
“Other” is a place to list
expenses not itemized on the
main form.

11. Use the P&L (Profit & Loss) to
fill out this section.
The $18,661.50 will be put on
the Schedule 1, “Additional
Income,” Line 12.
Please see next slide.

12. Schedule 1
This is the amount from your
Schedule C. If you have multiple
Schedule C business it would all
be totaled here. Line 22 in this
section is what is reflected on the
2nd page of your 1040 on Line 6.
See next slide.

14. Qualified Business
Income Deduction (QBI)
It is a percentage
deducted from your income
if your business
had a profit.
There are a few
trades & businesses
that don’t qualify, like
accounting, health, etc.
There are also income
thresholds.
Do your research.
If there is enough interest
I can offer a webinar
strictly on QBI.

16. Thank you for participating!
◦ If you are interested in the opportunity to be a part of my team marketing the business utilized in this
webinar, please contact me.