Schedule C

Definition

The tax form where a sole proprietor reports the business.

Why It Matters

A sole proprietor cannot pay themselves a salary, so this page of the personal tax return shows the business's earnings before any owner pay comes out. Reading a sole proprietor's tax return mostly means reading this page. The totals the IRS publishes from this form are also the closest public match to the SDE margin an industry actually runs at.

In numbers: A two-truck operator reports $415k of net profit on Schedule C; that line, not the bank balance, is what a lender reads as earnings, and published industry margins are built from millions of these filings.