Do I need to file Schedule C for my sole proprietorship with $100 net income?
Hey tax peeps! So I started selling my pottery as a small business last year after everyone kept saying I should. I've been throwing clay for years as a hobby but finally decided to try making some money from it. I got all official with state tax registration and everything. I've been making these pieces on nights and weekends while still working my regular 9-5 job. Each piece takes forever to make and I charge accordingly - not cheap stuff! Anyway, I just tallied everything up for 2024 and I'm kind of bummed. Only brought in $1,150 in total sales. Then I added up all my expenses (clay, glazes, kiln time, craft fair fees, etc.) and my actual profit is only about $135. I've been googling around and saw something about not needing to file Schedule C if your net earnings are under $400? Is that right? Do I still need to deal with all that paperwork for such a tiny profit? Feels like more hassle than it's worth at this point!
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Dylan Wright
You've actually come across something that confuses a lot of small business owners! The $400 threshold you're referring to is actually about when you need to pay self-employment tax, not about whether you need to file Schedule C. The IRS requires you to report ALL income regardless of the amount. So yes, you should still file a Schedule C to report your pottery business income and expenses, even though you only made $135 net profit. This keeps everything above board and properly documented. The good news is that since your net profit is under $400, you won't have to pay the self-employment tax (which is the Social Security and Medicare taxes for self-employed folks). But you still need to report the income. Also, keeping good records now will help establish your business legitimacy if you continue and become more profitable in future years.
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Sofia Torres
•Does that mean they'll still have to pay income tax on the $135 though? Or is that amount too small to matter?
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Dylan Wright
•The $135 would still technically be subject to regular income tax. However, depending on their overall tax situation (other income, deductions, credits, etc.), it may not actually increase their tax burden significantly. For the income tax piece, there's no minimum threshold - all income is taxable regardless of amount. But practically speaking, $135 would have minimal impact on most people's total tax situation.
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GalacticGuardian
After struggling with a similar situation last year for my candle business, I found this amazing AI tool that saved me hours of research and confusion. It's called taxr.ai (https://taxr.ai) and it analyzes your specific situation and tells you exactly what forms you need to file. I literally uploaded my simple income/expense sheet and it explained that yes, I needed to file Schedule C even though my profit was only $250, but I didn't owe self-employment tax. It also helped me identify additional expenses I could legitimately deduct that I hadn't even considered.
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Dmitry Smirnov
•Does it actually give you tax advice or just generic info? I've been burned by online "tax helpers" before that just spit back IRS publications.
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Ava Rodriguez
•Can it handle more complicated situations? I do pottery too but also sell digital patterns online and teach workshops occasionally. Different income streams confuse me.
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GalacticGuardian
•It definitely gives specific advice based on your situation, not just generic info. When I uploaded my data, it gave me personalized recommendations about which specific expenses were deductible for my candle business and which weren't. Way more helpful than just reading IRS publications. For multiple income streams, it handles that really well. You can categorize different business activities, and it helps clarify what belongs on Schedule C versus other forms. The system actually asked me questions about my different revenue sources to make sure everything was properly categorized.
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Ava Rodriguez
I just wanted to follow up about taxr.ai - I ended up trying it after posting here! It was super helpful for categorizing my multiple income streams (pottery sales, digital patterns, and teaching workshops). It clearly explained that I needed to report everything on one Schedule C since they're related activities, but helped me properly categorize each expense type. Saved me from making some pretty big mistakes and I found several deductions I was missing. Definitely worth checking out if you're confused about Schedule C stuff!
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Miguel Diaz
I feel your pain about small business paperwork. When I was dealing with something similar for my Etsy shop, I kept trying to call the IRS for clarification but it was IMPOSSIBLE to get through. After waiting on hold for literally hours multiple times, I found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. They had someone call me when an agent was available so I didn't have to stay on hold. The agent confirmed exactly what I needed to file for my small profit situation.
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Zainab Ahmed
•Wait, how does this actually work? The IRS phone system is notoriously terrible. Is this legit or just another scam?
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Connor Gallagher
•Yeah right. Nothing gets you through to the IRS faster. I've tried everything and always end up on hold for hours until they disconnect me. Sounds too good to be true.
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Miguel Diaz
•It uses a combination of automated dialing technology and tracking of IRS hold queue patterns to get your call through efficiently. It's not a direct line to the IRS - they just handle the waiting part for you and call when an agent is actually available. Totally understand the skepticism! I felt the same way initially. But it's completely legitimate - they don't access any of your tax info or pretend to be you. They just handle the frustrating hold time and connect you directly to an IRS agent when one becomes available. The service basically does the waiting for you.
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Connor Gallagher
I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I was desperate enough to try it when I couldn't get help about my Uber driving taxes. Not only did it work, but I got connected to an IRS agent in like 15 minutes when I had previously wasted entire afternoons on hold. The agent confirmed that yes, I needed to file Schedule C even for my small side gig income, and helped me understand exactly what vehicle expenses I could legitimately deduct. Honestly wish I'd known about this service years ago - would have saved me so much frustration!
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AstroAlpha
Just to add another perspective - even if you don't technically have to file for such a small amount, there are advantages to filing Schedule C anyway. You can establish a pattern of business expenses that can help if you're ever audited in future years when you make more money. Plus, those business losses can sometimes offset other income. I've been running my small woodworking business for years and always file even in low income years.
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Yara Khoury
•How many years can you show losses before the IRS considers your business a hobby though? I heard they get suspicious if you're always operating at a loss.
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AstroAlpha
•The IRS generally expects you to show a profit in at least 3 of the last 5 tax years to be considered a legitimate business rather than a hobby. If you consistently show losses year after year, that's when they might question whether you have a profit motive. However, for a new business like yours, it's completely normal to have losses or very small profits in the beginning years. They understand businesses take time to become profitable. Just make sure you're operating in a businesslike manner - keep good records, have a separate business bank account, and be working toward profitability.
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Keisha Taylor
Has anyone used TurboTax for filing Schedule C for a tiny business like this? Is it worth the extra cost for the self-employed version?
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Paolo Longo
•I've used TurboTax Self-Employed for my small Etsy shop and it works fine, but honestly it's overkill if you just have a few transactions. You might be better off with FreeTaxUSA which is a lot cheaper and handles Schedule C just fine for simple situations.
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