Host: What is a Schedule C?

Aurthur Auerbach: Schedule C is where the person who is self-employed reports their income. You answer a few basic questions at the top of the form. Now what you need to note is Schedule C is a sole proprietorship which means one. So if husband and wife or two people are participating in the same business, that's not a sole proprietorship, that's a partnership or a joint-venture. So Schedule C is for a sole proprietor, means one owner that's why it says on the form itself when you read the form, name of the proprietor, individual, one Social Security Number goes on there.

The next couple of lines ask you how you are doing business. So for example, I might be Art Auerbach CPA or I can -- my name on the front page of the return could be Aurthur Auerbach but the name of my business could be Ace Bookkeeping Services and I could be a sole proprietor. So if I hold myself out to the public under an assumed name or a fictitious name or doing business as name, then that's what you fill in on there, on the return and you may have an Employer Identification Number different from your Social Security Number so you would fill that in also. Then the next couple of questions they, how are you keeping your records? So are you on cash method of accounting or accrual method, most home business, 99.

9% of them are on the cash method of accounting. So what you take in during the year that's your income, what you pay out during the year could be your expenses.