When tax time rolls around, the owner must report all income and expenses generated by the business on Schedule C , Profit or Loss from Business, or Schedule C-EZ , Net Profit from Business. In either case, the taxpayer deducts all business expenses from business income. A very small business, such as a lawn-mower blade sharpening operation working on a cash basis, could simplify the tax chores a bit. Read the instructions for this form for a more complete set of the rules. A taxpayer who can't use Schedule C-EZ must report business income and expenses on Schedule C. Don't try to combine the paperwork here to save time.
Separate businesses require separate forms.
If you have more than one sole proprietorship business or your spouse has a separate business, the IRS expects you to complete a separate Schedule C for each business. Whenever a taxpayer has a choice of which tax form he can use, the general rule of thumb is to keep it simple. If you qualify to use Schedule C-EZ, you should probably do so. Bankrate Inc. All rights reserved.