Revenue to net profit, expense category by category — the way Schedule C wants it
Schedule C is where self-employment becomes arithmetic: gross revenue at the top, the IRS's expense categories in the middle, net profit at line 31 — the number that drives SE tax, income tax, QBI and quarterly payments. This calculator mirrors the real form's categories, applies the rules people miss (the 50% meals haircut, the standard mileage rate), and prices the insight that changes behavior: what each $100 of legitimate expenses actually saves you.
| Category | The rule to know |
|---|---|
| Vehicle | Standard mileage ($0.70/mi 2026) or actual costs — mileage log required either way; commuting never counts |
| Meals | 50% deductible (business purpose documented); entertainment: 0% |
| Home office | Simplified $5/sq ft (max $1,500) or actual-share method — exclusive, regular use required (see the Home Office tool) |
| Phone/internet | Business-use percentage only — 100% claims on personal lines invite questions |
| Equipment | Under $2,500/item: expense it (de minimis); larger: Section 179/bonus depreciation usually still expenses it year one |
| Contract labor | $600+ per contractor requires you to issue a 1099-NEC |
| Health insurance | NOT on Schedule C — it's an above-the-line personal deduction (still valuable, different line) |
Service freelancers typically show 60–90% margins; product sellers 10–40% after inventory. Margins far below your industry's norm — or losses year after year — raise both hobby-loss questions (see the Hobby Loss tool) and audit interest. The goal is never to inflate expenses: it's to capture 100% of the real ones, which most people don't.
A separate business bank account + card (transaction history = 90% of your records), a mileage app, a receipts folder (photos suffice), and 15 minutes monthly. The standard is "ordinary and necessary" for your trade — a wide standard you're entitled to use fully, documented.
Common and helpful for your type of business — the legal standard is generous. A camera is ordinary for a photographer, questionable for an accountant. When genuinely mixed-use (phone, internet, vehicle), deduct the documented business percentage.
Yes — Schedule C losses offset other income (W-2 wages included), subject to hobby-loss and at-risk rules. Repeated losses (3+ of 5 years) invite the hobby question; profit motive documentation is your defense.
Documentary evidence for expenses $75+ (and all lodging); bank/card statements cover most of it. The practical system: dedicated business card + photo archive of paper receipts + mileage app. Cash expenses without records effectively don't exist.
Standard mileage ($0.70/mi) wins for most passenger cars and all record-keeping sanity. Actual costs (gas, insurance, depreciation × business %) can win for expensive/heavy vehicles. You must choose standard in year one to preserve the choice.
Schedule C is the sole-proprietor/single-member-LLC form inside your 1040. S-corps file separately (1120-S) and split income into salary + distributions — a different game above ~$80-100k of profit (see the SE Tax tool's S-corp note).
Almost never — personal expenses stay personal even when work-adjacent. Exceptions are narrow (safety gear, true uniforms unsuitable for street wear). This category is the classic audit bait; skip it.
Yes — all figures compute locally in your browser.
Run your real year through the categories once and two things happen: the quarterly-tax panic gets a number, and the missing-expense hunt gets a bounty — roughly $37 per $100 found. Fifteen minutes a month keeps both permanent.