Self Employment

📘 Module 3: Self-Employment & Schedule C

How to File for Business Owners, Hustlers, and 1099 Clients

👋 Welcome to Module 3!

This lesson teaches you how to handle taxes for self-employed clients, 1099 earners, and small business owners. Whether they braid hair, drive Uber, resell online, or own a legit LLC — if they’re not receiving a W-2, they’re likely self-employed.

You’ll learn how to file Schedule C, what counts as a write-off, and how to explain taxes in plain terms your clients will understand.

📄 Who Needs a Schedule C?

Use Schedule C if your client:

  • Receives a 1099-NEC
  • Gets paid via Cash App, Zelle, Venmo
  • Has a side hustle or small business
  • Is an independent contractor
  • Runs a business as a sole proprietor or single-member LLC

💡 Anyone who earns $400 or more from self-employment must file a tax return and usually needs Schedule C.

💼 What Is Schedule C?

Schedule C is the form used to report profit or loss from a business.

It includes:

  • Business info (name, EIN, address)
  • Gross income (total earned)
  • Expenses (deductions/write-offs)
  • Net profit (taxable income)

🧾 Common Self-Employed Income Sources

  • Hair, makeup, or nails
  • DoorDash, Uber, Instacart
  • Freelance writing/design
  • Airbnb or Turo
  • Online sales (Etsy, eBay, Amazon)
  • Lawn care, cleaning services, consulting

You’ll enter the total income from 1099s, invoices, or payment apps on Line 1 of Schedule C.

✂️ Business Expenses (Write-Offs)

A write-off is a business-related expense. It must be:

  • Ordinary (common for your industry)
  • Necessary (helpful for the work you do)

Examples:

Category

Write-Off Examples

Advertising

Flyers, logos, social media ads

Car/Truck

Mileage, gas, car insurance (if used for work)

Office Supplies

Paper, pens, printer, notebooks

Meals

Lunch with clients, business travel food

Utilities

Internet or phone used for business

Rent

Home office or rented studio/shop

Travel

Hotels, airfare, taxis for business trips

Insurance

Business liability or health insurance (if self-employed)

📉 Calculating Net Profit

Net Profit = Total Income – Business Expenses

This number is what gets taxed. It also determines:

  • Eligibility for EITC or CTC
  • How much the client owes inSelf-Employment Tax
  • Whether they need to pay estimated taxes

💸 Self-Employment Tax (SE Tax)

SE tax is 15.3% and covers Social Security + Medicare.
It applies to net income from self-employment.

If your client earns over $400 net, they will owe SE tax, even if they have no other tax liability.

🗓️ Estimated Tax Payments

Self-employed clients should be making quarterly estimated tax payments to avoid penalties.

Deadlines:

  • April 15
  • June 15
  • September 15
  • January 15

Use Form 1040-ES to calculate and send in payments.

✅ Module 3 Activity

🧾Practice Scenario

Client:

  • Name: Dana Parker
  • Earned $18,500 from DoorDash
  • Mileage: 5,200 miles
  • Phone bill: $90/month
  • Paid $300 for car maintenance
  • Bought delivery bags and hot boxes: $80

Instructions:

  1. Fill out a sample Schedule C
  2. List all deductible expenses
  3. Calculate total business income
  4. Subtract expenses to get net profit
  5. Determine if SE tax applies

📝 Module 3 Quiz

1. Which IRS form is used to report self-employed business income?
A) W-2
B) 1099-NEC
C) Schedule C
D) Schedule A

2. True or False: A self-employed person must file taxes only if they earn over $1,000.
A) True
B) False

3. What’s the current self-employment tax rate?
A) 12.4%
B) 7.65%
C) 10%
D) 15.3%

4. Which of the following is not a valid write-off?
A) Netflix subscription
B) Business cards
C) Gas for deliveries
D) Mileage tracker app

5. What happens if a self-employed person doesn’t make estimated payments throughout the year?
A) They get a bonus refund
B) The IRS forgives it
C) They may owe penalties
D) They don’t need to file

✅ Answer Key:

  1. C
  2. B (It’s $400+)
  3. D
  4. A
  5. C