A staffing agency invoice belongs on Line 11, contract labor.
Why line 11
A staffing or temp agency bills you for workers who are its own employees, so you deduct the invoice and have no payroll or 1099 duty of your own. Line 11 is the usual home, because what you bought is labour from people who are not your employees. Some preparers itemise the same invoice as outside services on line 27a, which is equally acceptable; choose one and keep it. If the agency's workers produced goods or inventory you sell, the cost moves to Part III cost of labor instead.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a staffing agency invoice lands on Line 11 without you sorting it.
Start for freeWhat a staffing agency invoice is confused with
- Line 27a, other expenses
- Both line 11 and an itemised outside services entry on line 27a are accepted for an agency invoice, so the only real error is switching between them year to year.
- Part III line 37, part iii line 37, cost of labor
- Agency labour used to produce goods you sell is Part III line 37 cost of labor, which reaches income through cost of goods sold.
- Line 26, wages
- If you convert a temp to your own payroll, their pay from that date forward is wages on line 26.
Examples that belong on line 11
- A 4,000 dollar temp agency invoice for two weeks of warehouse help
- A 1,200 dollar bill for a temporary receptionist during a staff absence
- An agency markup of 35 percent over the worker's hourly rate
- A seasonal labour contract for a busy December
- A 2,500 dollar invoice for event staff on a single project
What does not belong here
- Issuing a 1099-NEC to the agency's workers, who are not your payees
- A permanent placement fee for a hire you keep, which is a recruiting cost on line 27a
- Wages for workers you later put on your own payroll, which are line 26
- Workers compensation premiums you carry, which are insurance on line 15
What to keep
Keep the agency invoices and the contract showing the agency employs the workers. That contract is what proves you had no withholding or information return duty.
Other expenses on line 11
| Expense | Line |
|---|---|
| a freelance developer or designer | Schedule C, Line 11 |
| a freelance editor or bookkeeper | Schedule C, Line 11 |
| a freelance photographer | Schedule C, Line 11 |
| a subcontractor on a client project | Schedule C, Line 11 |
| a virtual assistant | Schedule C, Line 11 |
| a website bug fix by a contractor | Schedule C, Line 11 |
Related lookups
- Where do client gifts go on Schedule C?
- Where do wages for production workers go?
- Can I pay my child and deduct it on Schedule C?
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a staffing agency invoice lands on Line 11 without you sorting it.
Start for free