Schedule C expense categories, line by line

If you run a single-member LLC or a sole proprietorship, your business income and expenses end up on one form: Schedule C, Profit or Loss From Business. Part II of that form is a list of expense lines, and every receipt you keep during the year eventually lands on one of them.

Filing receipts by those lines as you go, rather than sorting a year of them in April, is most of what bookkeeping for a small business is. This is the list, line by line, with what belongs where and the cases that trip people up. It follows the 2025 form and the IRS instructions for Schedule C; check the current year’s instructions before you file, and ask your accountant about anything that depends on your situation.

The lines

Line 8, Advertising. Ads, sponsored posts, business cards, a listing fee, a sign for the shop. The design work for an ad goes here too.

Line 9, Car and truck expenses. Either the standard mileage rate or your actual costs (fuel, repairs, insurance, depreciation), for the business share of your driving. Keep a mileage log either way; the IRS asks for one. Parking and tolls for business trips go here as well.

Line 10, Commissions and fees. Payment-processor fees (the cut Stripe, Square or a marketplace keeps), referral fees, commissions you paid to others. Bank fees are not here; see line 27b.

Line 11, Contract labor. People you paid who aren’t employees: a freelancer, a subcontractor. If you paid someone $600 or more in a year you generally owe them a Form 1099-NEC.

Line 12, Depletion. Natural resources. Almost nobody reading this has it.

Line 13, Depreciation and section 179. The cost of equipment and other property that lasts more than a year, spread over its life, or deducted at once under section 179 or the de minimis safe harbor. See “Equipment” below.

Line 14, Employee benefit programs. Health and other benefits for employees. Not your own health insurance, which goes on Form 1040 (Schedule 1), not Schedule C.

Line 15, Insurance (other than health). Liability insurance, business property insurance, professional indemnity. Not health, not the car (that’s line 9 if you use actual costs).

Line 16a and 16b, Interest. Mortgage interest on business property (16a) and other business interest, such as a business loan or the interest on a business credit card (16b).

Line 17, Legal and professional services. Your accountant, your lawyer, the tax-prep fee for the business part of your return.

Line 18, Office expense. Postage, paper, printer ink, small office supplies, the things you’d buy at an office-supply store. Not rent (line 20b), not the computer (see “Equipment”).

Line 19, Pension and profit-sharing plans. Contributions for employees. Your own SEP or solo 401(k) contribution goes on Form 1040, not here.

Line 20a and 20b, Rent or lease. Vehicles, machinery and equipment you rent (20a); the office, the studio, the storage unit (20b). A coworking membership is 20b.

Line 21, Repairs and maintenance. Fixing things you already own: the laptop screen, the van’s brakes, the shop’s leaky tap. Improvements that add value or extend life are not repairs; they’re depreciated.

Line 22, Supplies. Materials you use up in the work that aren’t part of what you sell: cleaning supplies, small tools, consumables. Materials that become part of a product you sell belong in cost of goods sold (Part III), not here.

Line 23, Taxes and licenses. Business licenses, permits, the state LLC fee, the employer share of payroll taxes if you have employees, sales tax you paid on business purchases when it isn’t rolled into the item’s cost. Not your own income tax and not self-employment tax.

Line 24a, Travel. Flights, hotels, taxis and ride shares while away from home on business. Not the meals; those are next.

Line 24b, Deductible meals. Business meals with a client, a supplier or a contractor, and meals while travelling for business. Only 50% is deductible, which is why this line asks for the deductible amount, not the receipt total. Keep who was there and why on the receipt. Entertainment (the game, the show) is not deductible at all.

Line 25, Utilities. Electricity, water, gas, internet and phone for the business. For a home office, the home-office form handles the shared utilities; a phone line used for both gets only the business share.

Line 26, Wages. Wages you paid to employees, before payroll taxes. A single-member LLC owner doesn’t pay themselves wages; what you take out is an owner draw, and it isn’t an expense at all (more on that below).

Line 27a, Energy efficient commercial buildings deduction. A specific deduction for qualifying building improvements, with its own form. Most small businesses never use it.

Line 27b, Other expenses. Everything that is a real business expense but doesn’t fit a line above. You list each kind in Part V. Common ones: software subscriptions, website hosting, bank fees, education and training, trade-association dues, the equipment you deduct at once under the de minimis safe harbor. Before the 2025 form this was line 27a, so older articles will say 27a.

The cases people misfile

Software. A subscription (design tools, an email service, cloud storage, this app) is an other expense on line 27b. Software you bought outright for more than the de minimis amount is depreciated on line 13. Most small businesses have only subscriptions, so 27b is the usual answer.

Phone and internet. Utilities, line 25, for the business share. If the plan is also your personal phone, deduct the business percentage and keep a note of how you got it.

Equipment. A laptop, a camera, a desk. Each item costing $2,500 or less can be deducted in the year you buy it under the de minimis safe harbor, usually on line 27b. Above that, it’s depreciation on line 13, where section 179 often lets you deduct the whole cost in year one anyway. Either way, keep the receipt with the item’s description on it.

Meals. Half, on line 24b. A coffee at your desk alone is not a business meal. A coffee with a client is. Groceries never are.

Inventory and materials. If you sell products, what you paid for the goods you sold goes in Part III (cost of goods sold, line 4), not in Part II. Only the stock that sold during the year counts; what’s still on the shelf at year end isn’t deducted yet.

Owner draws. Money you move from the business to yourself is not an expense and never appears on Schedule C. It’s your profit, taken out. The same goes in the other direction: money you put in is an owner contribution, not income.

Health insurance, retirement contributions, half of self-employment tax. These are deductions on your personal return (Schedule 1), not business expenses on Schedule C. Keep the records, but don’t file them as business expenses.

Home office. Its own form (8829) feeds line 30, below the expense lines. Don’t also file the rent or mortgage interest on line 20b or 16a.

How Plainbooks files them

Plainbooks seeds every business book with these lines as categories, with the meals category set to count 50% and the software, equipment, education, bank-fee and other-expense categories pointing at line 27b. When a receipt comes in, it suggests the category; the tax view then shows the year’s totals by line, with the meals already halved. At year end the export lists every category with its line number, so your accountant sees the mapping, not just the totals.

What a line is for is stable; what you may deduct on it depends on your facts. The categories are a filing system, not tax advice. Your accountant confirms the list.