Schedule C Toolkit: Sorting, Home Office, Mileage & Software

Schedule C is where sole proprietors and single-member LLCs report business profit or loss. Four everyday systems decide whether that number is right: how you sort expenses, the home-office rule, the mileage log, and how you treat software. None of them is exotic — all four are lost by disorganization, not by ignorance.

SORTING EXPENSES (CSV / bank statements): download your bank and card statements as CSV files and let a spreadsheet or tool pre-sort them into Schedule C categories — supplies, advertising, utilities, and so on. Then a HUMAN reviews every line. Auto-sorting suggests; it never decides: sorters miscategorize (the wholesale-club run that was really family groceries), and the signature on the return is yours, under penalties of perjury. The habit that makes sorting honest: one separate business account and card, so personal spending never enters the file at all.

HOME OFFICE — SIMPLIFIED OPTION: $5 per square foot of space used regularly and exclusively for business, up to 300 square feet — a maximum deduction of $1,500, with no receipts to total (Rev. Proc. 2013-13). The actual-expense method can be worth more, but it needs records for rent, utilities, and repairs, and the same exclusive-use test. W-2 employees cannot claim either version — see the Work-Clothing playbook for why employee deductions are a closed door.

MILEAGE: the standard mileage rate for 2025 is 70 cents per business mile (IRS Notice 2025-5); the rate is reset for each year, so always use the rate for the year you are filing. The deduction stands or falls on the LOG, written at the time: date, where you went, the business purpose, and the miles. Commuting from home to a regular workplace is never deductible; parking and tolls are deductible on top of the rate. The classic audit failure is a log invented in April from memory.

SOFTWARE & SUBSCRIPTIONS (SaaS): cloud hosting, bookkeeping apps, editing suites, and other tools the business actually uses are ordinary-and-necessary expenses under §162. Split mixed accounts: the business percentage is deductible, the personal percentage is not, and the subscription receipt is the proof.

Common mistakes: one mixed bank account for everything; guessing mileage at filing time; deducting 100% of a phone or internet bill with personal use; and believing that sorting is the same as substantiating — categories organize deductions, receipts prove them.