What to do if I receive a letter from IRS saying "Please provide an explanation and/or schedule with documentation to support your Schedule C–Profit or Loss frm Busines?"

It sounds as if the IRS wants to see documentation supporting the income and expenses you listed for your business on Schedule C.

Here are some of the things the IRS may be looking for:

• Do you keep a list or spreadsheet of the income when it comes in? 
• Do you have a list or spreadsheet of expenses that you've incurred?
• If you claimed vehicle expenses?  Do you have a log of mileage or expenses?

No, I didn't keep any documentation of expenses, as this was my first year. I just went by gas, mileage, and other necessities like phone bill, internet, etc.... Is this an audit?

No, this is not an audit.  The IRS wants you to send them documentation for the expenses you took on your Schedule C.  You need to provide them with receipts for your business expenses and a mileage log if you took mileage on your return.

A mileage log needs to have the date, business purpose and number of miles driven.

If you cannot verify this information then the deductions will be disallowed and you will owe more tax.