Schedule C Income is a calculation sheet used by banks and credit unions to determine your monthly income and monthly expenses. In a nutshell, it calculates your monthly income and monthly expenses after subtracting taxes from your monthly earnings. It will vary according to the type of business you have and your personal circumstances.
The method used for calculating your Schedule C income depends on several factors. The major factors are your net earnings or the amount of money you can spend in a month without losing anything or earning less than what you spent. Some of the ways you can calculate your net earnings include:
Other calculations you can use include:
The basic idea of a Schedule C Income worksheet is that your overall cash flow will depend on your income, expenditures, and debts. The balance sheets usually used for financial planning show that the balance sheet will show your liabilities only and not your assets. However, that should not be viewed as an accurate representation of your financial position. Your personal financial situation will also help you in estimating your net income.
For example, if you make a profit in your business, you will report a larger profit and a higher net income on your balance sheet. But, if you pay more out of your earnings, you will end up having a smaller net income. Calculating your net income is more difficult than calculating your cash flow.
The importance of a Schedule C Income worksheet is that it shows you what your basic financial situation looks like and what would happen if you did not make any purchases. The results should give you a general idea about your personal finances and how much you need to save and invest for the future.
A Schedule C Income worksheet is also used by employers in order to have a more accurate picture of your earning capacity and monthly expenses. It helps the employer to know how much salary you are paid monthly and if you have enough funds to pay your monthly mortgage or car payments.
The best thing about a workbook that calculates your Schedule C Income is that it tells you the basics of the cash flow and future financial expectations. You can easily learn about the different methods used by the banks and credit unions to calculate your income and help you understand better how your financial situation looks like.