Locate Schedule C on the IRS website and complete the top section. Enter your business information including name, addresses, and social security number. Check whether you used cash or accrual basis. In cash basis accounting, revenues are recorded when cash is actually received and expenses are recorded when they are actually paid. In accrual basis, revenues are recorded when the invoice is created and expenses are recorded when they are incurred. If you are not invoicing your employer, you are most likely using cash basis.

Complete Part III of Schedule C. Skip Part I since it requires a calculation from Part III. Calculate your cost of goods sold. This includes any costs associated with the production, purchase, or sale of merchandise to gain income, including labor and materials.

Complete Part 1 of Schedule C. Enter how much money you collected during the tax period. If you have no records, add the amounts from any 1099's you received from companies you worked for. Subtract any refunds and cost of goods sold (total from Part III). This number represents your gross income.

Complete Part II. Enter all your expenses for the year into the proper categories. Read all the categories as you may find expenses you didn't realize you could include. Complete IRS form 8829 if you used your home for business purposes. Subtract your expenses from the gross income from Part I to find your net profit or loss.

Enter your profit or loss on your personal tax return. Schedule C dictates exactly where to enter the information on your 1040. Complete your 1040 and submit Schedule C with your personal tax return.