GlidePath Money

Build a Schedule C from your side-business transactions

Turn a year of business transactions into a Schedule C-ready P&L, with category mapping that follows IRS line numbers. Won't replace your CPA, but will save them (and you) hours.

By the GlidePath team Advanced 11 min read

If you have a side business — consulting, an Etsy shop, freelance work, gig driving — Schedule C is the IRS form that turns your business activity into taxable income on your 1040. (Rental property is the big exception: rentals generally report on Schedule E, not C — more on that below.) Most people deal with it by frantically pulling bank statements in March. This walks through how to use GlidePath all year so that by the time tax season hits, your Schedule C is essentially already done.

What you’ll learn

  • How to keep business transactions separate from personal
  • How to map your spending categories to IRS Schedule C line numbers
  • How to handle the awkward cases: mileage, home office, the personal card you used for a business expense
  • How to produce a Schedule C summary + CSV your CPA can work straight from

Before you start

You’ll need:

  • At least one account on /Accounts set to the Business type
  • At least a few months of business transactions imported or entered
  • A rough idea of which IRS Schedule C line each of your spending categories belongs on. You map them yourself, one at a time — nothing is pre-mapped, and that’s deliberate: a wrong guess on a tax form is worse than a blank

What this isn’t for

This is for sole proprietors and single-member LLCs filing Schedule C. If you have a multi-member LLC (Form 1065) or an S-corp (Form 1120-S), the categorization still works but the export format won’t match the form you’re filing. GlidePath ships Schedule C support today; partnership and S-corp tax pack are on the roadmap. Rental property income generally isn’t Schedule C either — it reports on Schedule E (no self-employment tax), unless you’re providing hotel-like substantial services. If your “side business” is a rental, the categorization habits here still help, but the form is different — one to confirm with your CPA.

Also: this is bookkeeping, not tax advice. The output is a P&L that follows IRS line numbers. Whether to take the home-office deduction, how to handle a vehicle, what counts as “ordinary and necessary” — that’s between you and a CPA.

Step 1 — Add a business account (2 min)

If you don’t already have one, set up a separate bank account or card for business use. Even an extra checking account at the same bank you use personally. The reason: come tax time, every business transaction in one place beats trying to sift business from personal in a comingled account.

Add it on /Accounts and set Type to Business — the picker describes it as “Business (counts on /Business, not personal Net Worth)”, which is exactly what it does: business balances stay out of your personal net worth so the two pictures never double-count. The Subtype field is free text for your own labeling (“Checking”, “Card”).

That one type string is the separation mechanism. Every Schedule C figure that comes from your ledger is built from transactions on accounts marked Business — the account type is the switch, not a per-transaction setting. (A couple of lines come from elsewhere: depreciation from your asset list, home office from a square-footage setting. Those are covered below.)

Already have the account in GlidePath as a personal one? When /Business has no business activity yet it offers a Mark an existing account as Business lane — no transactions move, the existing activity just becomes business evidence. Either way you can change the type back on /Accounts at any time.

Try it: Open /Accounts ↗ (works when the desktop app is running on this computer — just browsing? See the demo)

Step 2 — Import or enter the year’s transactions (varies)

Same flow as personal — drop a CSV on /Import, use the browser extension, or enter manually. You pick the destination account during the import mapping step, so send the business statement to the business account and confirm everything landed correctly.

This is the moment where good hygiene during the year pays off. If you’ve been using the business account consistently, this step is fast. If you’ve been mixing, expect an hour of “this was business, that was personal” sorting.

Step 3 — Map your categories to Schedule C lines (5 min)

Open /BusinessTaxReady — the app links you there from /Business as “Map categories now →” — and work through the guided category mapper in section 3. Nothing is pre-mapped. It lists the categories that actually appear on your business accounts this year, and you place each one on a Schedule C line yourself, one at a time, with a Map button per category.

That’s a deliberate choice rather than a missing feature. A guessed mapping is invisible once it’s wrong: “Software” could belong on Line 18 (office expense) or Line 22 (supplies) depending on how you actually use it, and nobody wants to discover a silent default on a tax form in April. So the app leaves the line blank until you place it.

The mapping follows the real form — Line 8 advertising, Line 15 insurance, Line 17 legal and professional services, Line 18 office expense, Line 22 supplies, Line 24a travel, Line 24b deductible meals, and so on. If you have business-specific categories (you sell prints, so you have “Print Lab Fees”), place them on whichever line fits.

One consequence worth holding onto, because it shapes everything below: the mapping is per category, not per transaction. Every transaction in a category lands on the line you gave that category. There’s no way to send one charge somewhere different — which means categories are the unit of control here, and a category that mixes business and personal spending will carry both onto the form.

Anything you don’t map is left out entirely. The app says so plainly: unmapped income isn’t counted in gross receipts and unmapped costs aren’t counted as expenses. So an empty mapping isn’t a small omission — it’s the difference between a real Line 31 and a structurally meaningless one, which is why the app refuses to present Line 31 as a profit figure until the mapping exists.

The mapping is stored in schedule-c-mapping.csv, and it persists — you only do this once, not every year.

Step 4 — Handle the special cases (3 min)

A few categories on Schedule C have rules that don’t reduce to “sum the transactions in a category.”

Vehicle expenses (Line 9). You have two options: actual expenses or standard mileage. For the standard rate you need a mileage log — open the Mileage & 1099 tab on /Business and use the Log a trip form (date, miles, purpose), or import from MileIQ, Everlance, Stride, or a CSV. GlidePath multiplies by the IRS rate for the year. Don’t double-dip; pick one method and stick with it.

Note where that total goes: the mileage deduction doesn’t post itself onto Line 9 in the Schedule C report. It travels as its own Mileage-{year}.csv inside the accountant pack, for your preparer to place. If Line 9 looks empty after you’ve logged trips, that’s why — the log isn’t broken.

Home office (Line 30). Optional. If you use part of your home regularly and exclusively for business, you may qualify for the deduction — the eligibility rules are narrower than they sound. Enter your office square footage on the Home office tab of /Business. GlidePath computes both methods — the simplified one ($5/sq ft, up to 300 sq ft, max $1,500) and actual expenses — and defaults to picking whichever is higher, so it’s worth entering the actual-expense figures rather than assuming the simple path is the cheap one.

Personal card used for business. It happens, and it’s worth being straight about how the app handles it: Schedule C is built from transactions on accounts marked Business, so a charge sitting on a personal card doesn’t reach it. There’s no per-transaction “this one was business” switch that flows to the form.

What does work is reimbursing yourself from the business — but how you categorize the reimbursement is the whole thing. Categorize it as the expense it was (Office Supplies, Software, whatever the purchase was) and it lands on that expense’s line like any other business cost. Categorize it as a transfer or an owner’s draw and it’s deliberately excluded, because that’s how the app treats money you simply move to yourself. Same money leaving the same account; the category decides whether it’s a deductible cost or a withdrawal.

Business card used for something personal. The reverse case has no special handling, and the per-category rule above is why it needs care: you can’t unmap a single charge. If a personal purchase sits in a category you’ve mapped, it rides onto the form with everything else. The lever that does exist is per-row — “Exclude this row from budgets and reports” on /Transactions, which drops it from the Schedule C walk entirely. Worth knowing that an excluded row also disappears from the unmapped callout, so it won’t nag you later.

The real lesson under both: the account is the boundary, and the category is the label. Separation you maintain when the money moves takes about a second; separation you reconstruct in March takes an evening.

Paying yourself: owner’s draws

Moving money from the business to your own account is a draw, not an expense — it’s how a sole proprietor pays themselves, and it doesn’t reduce your profit or your tax. (You’re taxed on what the business earned, not on what you took out.)

GlidePath recognizes a draw by the category name. Name a category Owner’s Draw, Owner Withdrawal, or Owner’s Contribution and those transactions are pulled out of the Schedule C lines and shown separately, so the flow stays visible without distorting profit. /Business prints the accepted names on the page so the matcher isn’t a guessing game.

Three things worth knowing before you rely on it:

  • You create the category yourself. GlidePath doesn’t seed one, so nothing is tagged as a draw until you make a category with one of those names.
  • Punctuation and capitals don’t matter; the words do. The matcher compares only letters and digits, so “Owners Draw”, “owners draw”, and “OWNER’S DRAW” all land the same place. Don’t agonise over the apostrophe.
  • But a different word is a different category. “Owner Draw” — dropping the s — is not a match, and neither are “Distributions”, “Owner Pay”, or “Personal Transfer”. They won’t inflate your profit, since an unmapped category is left out of the form entirely and shows up in the unmapped callout — but they will be missing from the draw ledger below, so it will tell you more is unclaimed than really is.

The /Business page carries an Owner draw — what’s unclaimed ledger once there’s profit to report: net profit, minus the tax set-aside, minus whatever operating buffer you choose to keep in the business, minus what you’ve already drawn. It’s a reflection of your own numbers, not an instruction to move money.

Step 5 — Run the year-end report (1 min)

Open the Schedule C tab on /Business. Pick the tax year. GlidePath generates a one-page report with:

  • Gross receipts (Line 1) — your categories mapped to Line 1, including any paid invoices you recorded as income
  • Returns and allowances (Line 2) — whatever you mapped to Line 2
  • Cost of goods sold (Line 4) — if you have any COGS categories mapped
  • Expenses, line by line (Lines 8–27b) — using your category mapping
  • Net profit (Line 31) — the number that flows to your 1040 Schedule 1

Every one of those comes from the mapping you did in Step 3, which is the point: nothing on the form appeared because the app guessed.

To hand it off, use Download Accountant Pack. You get GlidePath-AccountantPack-{year}.zip containing the line-by-line ScheduleC-{year}.csv your CPA can work straight from, alongside the mileage log, asset and receipt files — instead of them retyping numbers off a PDF.

What just happened

You went from “I’ll figure out taxes in March” to “my Schedule C is essentially done on December 31.” The mapping took 5 minutes; everything else was bookkeeping you’d be doing anyway.

The big leverage is the categorization-once-then-roll-up pattern. Once your mapping is set, every new transaction you categorize during the year automatically feeds the right Schedule C line. By November, the report is just a button click. By April, you’re not pulling bank statements at midnight.

What about the tax on that profit?

Line 31 is the number, but it isn’t the whole job — side-business profit arrives without withholding, and the IRS expects it in four installments rather than all at once in April. How much to set aside for taxes when you run a side business walks through the self-employment-tax arithmetic behind the usual 25–30% rule of thumb, the four dates, and what the safe harbor actually protects you from.

Ask Glide about this

Try: “What’s the difference between Schedule C and Schedule E?” — a common confusion for people with rental property or royalties. Or: “When does the IRS expect quarterly estimated payments?”

Common pitfalls

  • The home-office deduction has eligibility rules. “Regular and exclusive use” means the room can’t double as your guest bedroom. Read IRS Pub 587 or ask your CPA before claiming it.
  • Meals are 50% deductible (except for the temporary 100% rule that expired). GlidePath halves them automatically on the Schedule C line. Don’t enter them at half-value yourself.
  • The mileage method is “all in or all out.” You can’t take standard mileage for some trips and actual expenses for others on the same vehicle in the same year.
  • The CSV export is a starting point, not a filing. Your CPA still reviews. The export saves them 90% of the data-entry time, not 100% of the judgment time.
  • Side-business losses can be limited — but the “3 of 5” rule works the other way round. Turning a profit in 3 of 5 consecutive years earns you a presumption that you’re running a business for profit (IRC §183(d)); the IRS can still rebut it, but the burden shifts. Missing that mark is not automatic reclassification as a hobby. It just means the presumption doesn’t apply and the question is decided on the facts — how businesslike your records are, whether you depend on the income, whether you change tack after losses. Losses in a slow year don’t disqualify you; sustained losses with none of those facts behind them are what draw scrutiny. Worth a CPA conversation if you’re several years in without profit.