BureauzillaSchedule C Basics: What Sole Proprietor Freelancers Actually Track
Gross receipts, ordinary expenses, home office restraint, and a monthly close that makes April boring.
Most US freelancers who are not incorporated report business profit or loss on Schedule C (Form 1040). Net profit feeds income tax and, via Schedule SE, self-employment tax. You do not need fancy software on day one. You need a clear books habit.
What to capture all year
From IRS small-business recordkeeping themes in Publication 583 and the Schedule C instructions:
- Gross receipts — every client payment, with invoice number and date.
- Returns and allowances — rare for services, but track credits.
- Cost of goods sold — only if you actually sell inventory; most pure service freelancers skip this.
- Expenses — advertising, contract labor, office, software, travel, meals (subject to limits), utilities tied to the business, etc.
- Assets — equipment you depreciate or expense under current rules; keep purchase invoices.
Ordinary and necessary business expenses are the test. Personal Netflix is not a business deduction because you edit video on the couch.
Home office and car: document or do not claim
Home office and vehicle deductions are audit magnets when the log is fiction. If you claim them, keep a contemporaneous workspace or mileage record. If you will not maintain the log, do not invent one in April.
Monthly close that prevents tax-season archaeology
- Export bank and card CSV for the business account.
- Match deposits to invoices; flag undeposited checks.
- Snap stray receipts into the month folder.
- Note estimated-tax payments already made (see our quarterly estimated tax guide).
- Park open IRS or insurance letters as cases, not as “later.”
Bureauzilla sits beside the books: letters and receipts become cases with deadlines. Your CPA still maps categories onto Schedule C lines.