PA-40 Schedule C: PA Schedule C - Profit or Loss from Business or Profession (Sole Proprietorship) (PA-40 C) (Revision)
Pennsylvania · Pennsylvania DOR · Used for tax years 2024, 2025, 2026
PA Schedule C reports income, expenses, and net profit or loss from a business or profession operated as a sole proprietorship. It includes sections for cost of goods sold and depreciation and is included with Form PA-40 or PA-41.
Who files this form
Use PA Schedule C to report income or loss from a business you operate or a profession you practice as a sole proprietor. A sole member of an LLC must also complete this schedule.
Your activity qualifies as a business if your primary purpose is income or profit, you conduct it with continuity and regularity, and you satisfy the “Commercial Enterprise” test.
- Submit a separate PA Schedule C for each business you own or operate.
- Spouses who jointly own a business must complete separate schedules. Separate schedules are also required for spouses with separate business activities.
- Complete PA Schedule C even if your federal and Pennsylvania expenses are the same.
Report farming activity on PA Schedule F instead.
What you'll need
Have the following information and records available:
- The owner's name and Social Security number, business name and address, main business activity, and federal NAICS code.
- Your Federal Employer Identification Number and Pennsylvania Sales Tax License Number, if you have them.
- Separate Pennsylvania personal income tax books and records showing business income and expenses.
- Beginning and ending inventory, purchases, labor, materials, and other costs for Schedule C-1, when applicable.
- Asset descriptions, acquisition dates, costs or other basis, prior depreciation, and depreciation calculations for Schedule C-2, when applicable.
Include a statement explaining income reported on Line 4. Attach inventory explanations when required, including when you select “Other” for inventory valuation or change how inventory quantities, costs, or values are determined. Include a schedule for other costs reported on Schedule C-1, Line 5.
How to file
Include PA Schedule C with Form PA-40 or PA-41.
Report income in Section I and deductions in Section II. Add Lines 6 through 37 to calculate total expenses on Line 38. Subtract Line 38 from Line 5 to calculate net profit or loss on Line 39. If the result is a loss, fill in the loss oval. Enter the result on your Pennsylvania tax return.
The supplied text does not give a mailing address or e-filing instructions for this schedule.
Common mistakes
- Including personal expenses. Remove personal expenses from business deductions, including the personal portion of vehicle, travel, and entertainment expenses.
- Claiming federal bonus depreciation. Pennsylvania does not allow federal bonus depreciation. Use straight-line depreciation when an asset's Pennsylvania basis differs from its federal basis.
- Using the federal home office safe harbor. Pennsylvania requires actual costs to determine home office expenses.
- Combining mileage and actual vehicle costs. If you use the federal standard mileage rate, do not also deduct actual operating expenses, depreciation, or lease costs.
- Including your own salary in cost of labor. Schedule C-1, Line 3 excludes salary paid to yourself and subcontractor fees.
- Using a PA Schedule C-F Reconciliation. Pennsylvania no longer accepts it to adjust federal business income to Pennsylvania business income.
Questions people ask
Do I need PA Schedule C if my federal and Pennsylvania expenses match?
Yes. You must complete and include PA Schedule C even when there are no differences between those expenses.
Can I report multiple businesses on one schedule?
No. Submit a separate PA Schedule C for each business operation.
Where do I report home office expenses?
Report allowable home office expenses on Line 37. Use actual costs, not the federal safe harbor method, and answer “Yes” to the office-in-home question.
What if my business closed?
Fill in the out-of-business oval if the business was out of existence at the end of the tax year for which you are filing.
What if I do not have a sales tax license number or FEIN?
Leave the Sales Tax License Number space blank if you do not have one. Leave the FEIN space blank if you do not have an FEIN for your federal Schedule C.