An activity counts as a business when your main purpose is income or profit and you work at it with continuity and regularity. A hobby or an occasional activity does not count, and its income goes on Schedule 1 instead. A single-member LLC’s business goes on Schedule C as well, unless the LLC has elected corporate tax treatment.
Line 1 takes your gross receipts, meaning all the business’s income from every source. For a creator, that includes ad revenue, sponsorships, affiliate commissions, memberships and fan payments. Forms 1099-NEC, 1099-MISC and 1099-K report much of it, and income no form reports belongs on line 1 too.
Business costs are deducted from your gross receipts when they are ordinary and necessary for the business. Personal, living and family costs are never deductible. Mixed-use costs, such as a phone, internet or car, are deductible only for the share the business uses.
Your net profit is taxed two ways: as income on Form 1040, and as self-employment tax, which Schedule SE figures. The profit may also qualify for the deduction of up to 20% of qualified business income.
Sources
- IRS, 2025 Instructions for Schedule C (Form 1040)
- 26 U.S.C. § 61, Gross income defined
- 26 U.S.C. § 162, Trade or business expenses
- 26 U.S.C. § 262, Personal, living, and family expenses
Reviewed and updated September 2026. General information, not advice for your situation.