Schedule C Report

Premium Feature: This is a premium feature and may not be available on all plans. To access this feature, please upgrade to a supporting plan.
 

 

About the Schedule C Report


If you're a sole proprietor doing business in the U.S., you're required to file an IRS Form Schedule C along with your personal taxes (Form 1040). This tax form reports the profit/loss earned through your business.

WorkingPoint's Schedule C Report helps you prepare the IRS Form Schedule C by tracking the business activity you record in applicable accounts according to standard IRS tax categories on the IRS Form Schedule C, in addition to your regular accounting categories. WorkingPoint has assigned reporting categories to our pre-defined set of accounts but you can change them. If you add new Revenue, Expense or Cost of Sales accounts and the activity you plan to record in those accounts is tax-related, select the Schedule C Reporting Category you would like the entries to be reported on. If the activity in the account isn't tax-related, select "None" and the activity in that account won't be reflected on the Schedule C report.

The WorkingPoint Schedule C Report is an accrual-basis report and may include revenue and expenses not yet collected or paid.

Important Note: The WorkingPoint Schedule C reports only the activity you have entered into your WorkingPoint account based on tax line assignments you have selected. It is highly recommended that you review your tax line assignments and current tax rules with your tax advisor and make adjustments to line amounts before you file your final tax form.

For specific information on completing the Schedule C form, visit the IRS website.

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About Schedule C Reporting Categories


The WorkingPoint Schedule C report displays your account activity according to the IRS Schedule C tax categories that you select for each account in an applicable account type. Applicable account types include Revenue accounts, Expense accounts, Cost of Sales accounts and Other Income and Other Expense accounts. The account types are limited to these because, like the Income Statement, the Schedule C tax form reports the profit or loss earned through your business and these are the accounts types that are used to determine profit.

Accounting Equation for Determining Profit/Loss

Income - Cost of Sales - Expenses + Other Income - Other Expenses =  Net Profit/Loss


Default Accounts List Categories


We've gone ahead and assigned a category for the pre-defined set of accounts in your default Accounts List but you can change them if you want. Our pre-defined set of accounts does not include a straight one-to-one mapping to the Schedule C reporting categories. So, if there are categories you want to assign to an account but it isn't in the list, you can add it (if you are on the Premium plan).

To view the selected reporting categories for your accounts:

  1. Go to the Account List.

  2. Click the Export icon

The Accounts List export includes a column named Schedule C Tax Category. Here you will find the name of the IRS Form Schedule C tax line that has been selected for each applicable account.

To change the reporting category:

  1. Go to the Accounts List.

  2. Hover over the account you want to change and click Edit.

  3. Select a new reporting category for the account or if the account is not tax-related, select "None" and the activity in that account will not appear on the Schedule C report.

When adding a new Expense, Revenue or Cost of Sales account to your Accounts List (if your on the Premium plan), you will see that WorkingPoint preselects a reporting category for you. We have defaulted the category to the "Other" category per account type. But we recommend that you review the choices and select the category that best suits the activity you will record in the account. If the account is not tax-related, select "None" and the activity in that account will not appear on the Schedule C report.


For specific information on completing the Schedule C form, visit the IRS website.

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Viewing the Schedule C report


To view the Schedule C report:

  1. Click the Reports tab.

  2. Under Tax Reports, click Schedule C Report.

The current year's report will display automatically.

When you see the report on the screen, you can:

  • Click the arrows beside the year to move to a past or future year.

  • Click Show Details to expand the report to show the contributing accounts for all tax categories, or click the [+] icon to expand a particular category (line).

  • Click Hide Details to collapse the report to show only the summary amounts for each tax category, or click the [-] icon to collapse a particular category (line).

  • Click the print icon to print the report.

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Reading the Schedule C report


The WorkingPoint Schedule C report displays your account activity according to the IRS Schedule C tax categories you have selected for each account in an applicable account type, including revenue, expense, cost of goods sold, other income and other expense accounts.

We have designed our report to mimic the Schedule C report categories and line items so you can see the parts of the report clearly defined, as well as the line item details, including calculations. Please be sure to review your account activity and tax line assignments with your tax advisor and make any necessary adjustments to line amounts before you file your final tax form.

There are 5 parts to the Schedule C Report:

  • Part I - Income

  • Part II - Expenses (excluding expenses for business use of your  home)

  • Part III - Cost of Goods Sold

  • Part IV - Information on Your Vehicle

  • Part V - Other Expenses


In each section, WorkingPoint summarizes your account totals for the current tax year according to Schedule C reporting categories. For example, the entries for the current year for all Revenue accounts assigned to the Schedule C Reporting Category: "Gross receipts or sales" are added up and the total is displayed on Part I, line 1.

For more information or special instructions per section, please review the following notes:

Lines A through H

  • The numbers on this report are calculated using the accrual accounting method and may include revenue and expenses not yet collected or paid. When filling out your tax form, select Option 2 (Accrual) on line F.

Part I - Income

  • Line 2 - Returns and allowances
    WorkingPoint doesn't set up a pre-defined account for returns but you can set one up and select this category as the tax assignment. Just go to your Accounts List, click New Account and select Revenue. Then name the account and select "Returns and allowances" as the Schedule C Reporting Category.


For the purposes of this report, we display the amount for your returns and allowance account(s) as a positive if the account is negative and vice versa, depending on the actual value of your account total. Typically, the returns account is a negative value or $0.00 (if no returns have been recorded). This is because the returns account is designed to record the sales that are returned, thereby reducing your total revenue.

  • Line 4 - Cost of Goods Sold
    This value is calculated for you based on activity in Part IV.

Part II - Expenses

  • Line 24b -Travel, meals, and entertainment: Deductible meals and entertainment
    According to the IRS, generally, only 50% of your meals can be deducted.  Because of this, WorkingPoint displays only 50% of the amount in accounts assigned to this category. If you have expenses that qualify for more than a 50% deduction, you’ll need to adjust this amount on your final tax form.

Part III - Cost of Goods Sold

  • WorkingPoint uses the Cost method to value inventory. When filing out your IRS Form Schedule C, select Option a (Cost) on line 33.

  • For Schedule C reporting purposes, WorkingPoint reports cost of goods sold for inventory items through reporting the change of inventory, therefore you do not assign a category to the Cost of Goods Sold protected account. Cost of Goods Sold (COGS) is traditionally calculated by using the following equation:

Beginning Inventory + (Purchases) - Ending Inventory = Cost of Goods Sold

The assumption is: if you have some inventory to start with plus you buy more over the year, when you take inventory at the end of the year, whatever is gone (the difference) must have been sold.

WorkingPoint automatically records your COGS for the inventory items you sell. You can see this on the Income Statement report or by viewing the account activity for the Cost of Goods Sold account. If you only use the COGS account for what WorkingPoint records for you, then the COGS account value for the year should equal the Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold on the Schedule C report. If they do not match, the difference could be the result of the following:

  • If you have additional costs for labor, materials and supplies and other stuff that contributes directly to the sale of an item, WorkingPoint lets you track those as separate tax categories but they contribute to the Cost of Goods Sold total.

  • If you have used the Cost of Goods Sold account outside of the normal inventory operations, like for purchasing stuff you sell but don't track as inventory, WorkingPoint cannot report the amount recorded in those transactions. To avoid this, choose a Cost of Sales account other than Cost of Goods Sold to track purchases for things you sell but don't track as inventory.

Learn more about Cost of Goods Sold

Part IV - Information on Your Vehicle

At this time, we do not track vehicle usage or mileage.

Part V - Other Expenses

If you have business expenses that fall outside of the categories listed in Part II - Expenses, you can use Part V - Other Expenses to itemize and claim additional qualifying expenses. When assigning a Schedule C Reporting Category to an expense account, if you do not see an account that best matches your account, choose Other expenses from the list. WorkingPoint will display the name of the account and the amount of activity for accounts assigned to Other expenses in Part V, so you can check to see if these expenses qualify for deduction at tax time.

For specific information on completing the Schedule C form, visit the IRS website.

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