Schedule C or Schedule C-EZ - Which one should you use?

To C or not to C?  That’s the question if you’re a small business owner.  Actually, the real question is:  Can I file a C-EZ instead?  The answer is, as usual with the IRS, it depends!

Schedule C holds the title, “Profit or Loss from Business.”
Schedule C-EZ holds the title, “Net Profit from Business.” 

The Schedule C-EZ is a simplified way for reporting ordinary and necessary income and expenses for a small business owner.

If you’ll be reporting a business loss, you CANNOT use C-EZ. 

And here are the other situations that will eliminate you from filing a C-EZ: 

• Your deductible business expenses are more than $5,000
• You have inventory
• You pay wages to employees
• You depreciate business property
• You claim expenses for business use of your home
• You carry over passive activity losses from earlier tax years
• You operate more than one business as a sole proprietor or statutory employee.
  

So, in a “C shell”, the C-EZ is exactly that – easy; but it’s also for simple business returns – no depreciation, not much in business expenses, and no salaries.  At PRO-TAX we’ll help you determine which form you need – and save you the most money in the process. 

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