schedule-c-categories
Schedule C Expense Categories
The authoritative category reference for US small businesses filing Schedule C (Form 1040). Use this to determine which line an expense belongs on. S-Corps (Form 1120-S) and C-Corps (Form 1120) use different forms but similar categories.
Part III: Cost of Goods Sold (Lines 33–42)
Not an operating expense. COGS is reported separately and subtracted from revenue to calculate gross profit. Includes: raw materials, inventory purchases, direct labor for manufacturing, shipping to customers (if you're the seller), packaging materials.
Do NOT put SaaS tools, office supplies, or general business expenses here. COGS is only for costs directly tied to producing the goods you sell. If you're a service business with no physical product, you likely have no COGS.
Part II: Expenses (Lines 8–27a)
Line 8 — Advertising
Belongs here: Google Ads, Meta Ads, LinkedIn Ads, print ads, sponsorships, business cards, trade show booth fees, SEO services, PR agency fees, promotional merchandise, influencer payments for promotion, direct mail campaigns, billboard ads, podcast sponsorships.
Does NOT belong here: Website hosting (→ Line 27a Other), software tools used for marketing like HubSpot or Mailchimp (→ Line 27a Other), meals at networking events (→ Line 24b Meals).