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IRS.gov Website
taxmap/pubs/p334-000.htm#en_us_publink100024994
Publication 334

Tax Guide for Small Business

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(For Individuals Who Use Schedule C or C-EZ)

Future Developments(p2)

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For the latest information about developments related to Pub. 334, such as legislation enacted after it was published, go to IRS.gov/Pub334.

taxmap/pubs/p334-000.htm#en_us_publink100068795Introduction

This publication provides general information about the federal tax laws that apply to you if you are a self-employed person or a statutory employee. This publication has information on business income, expenses, and tax credits that may help you as a small business owner file your income tax return.
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This publication does not cover the topics listed in the following table.(p2)

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IF you need information about:THEN you should see:
Corporations Pub. 542
Business expensesPub. 535
FarmingPub. 225
Fishermen (Capital Construction Fund)
Pub. 595
PartnershipsPub. 541
Passive activitiesPub. 925
RecordkeepingPub. 583
RentalPub. 527
S corporationsInstructions for Form 1120S
Starting a businessPub. 583

Are You Self-Employed?(p2)

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You are a self-employed person if you carry on a trade or business as a sole proprietor or an independent contractor.
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You do not have to carry on regular full-time business activities to be self-employed. Having a part-time business in addition to your regular job or business may be self-employment.
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Trade or business.(p3)
A trade or business is generally an activity carried on to make a profit. The facts and circumstances of each case determine whether or not an activity is a trade or business. You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. You do need to make ongoing efforts to further the interests of your business.
Limited liability company (LLC). A limited liability company (LLC) is an entity formed under state law by filing articles of organization. Generally, for income tax purposes, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner's federal income tax return. For example, if the single-member LLC is not engaged in farming and the owner is an individual, he or she may use Schedule C or C-EZ.
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Sole proprietor.(p3)
A sole proprietor is someone who owns an unincorporated business by himself or herself. You are also a sole proprietor for income tax purposes if you are an individual and the sole member of a domestic limited liability company (LLC) unless you elect to have the LLC treated as a corporation.
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Independent contractor.(p3)
People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether they are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the person paying for the work has the right to control or to direct only the result of the work and not how it will be done. The earnings of a person who is working as an independent contractor are subject to self-employment tax. For more information on determining whether you are an employee or independent contractor, see Pub. 15-A, Employer's Supplemental Tax Guide.

Are You a Statutory Employee?(p3)

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A statutory employee has a checkmark in box 13 of his or her Form W-2, Wage and Tax Statement. Statutory employees use Schedule C or C-EZ to report their wages and expenses.

Business Owned and Operated by Spouses(p3)

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If you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. Do not use Schedule C or C-EZ. Instead, file Form 1065, U.S. Return of Partnership Income. For more information, see Pub. 541, Partnerships.
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Exception—Community income.(p3)
If you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U.S. possession, you can treat the business either as a sole proprietorship or a partnership. States with community property laws include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A change in your reporting position will be treated as a conversion of the entity. See Pub. 555 for more information about community property laws.
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Exception—Qualified joint venture.(p3)
If you and your spouse each materially participate as the only members of a jointly owned and operated business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. For an explanation of "material participation," see the instructions for Schedule C, line G.
To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. Each of you must file a separate Schedule C or C-EZ and a separate Schedule SE. For more information, see Qualified Joint Ventures in the Instructions for Schedule SE.

Additional Information(p3)

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What you need to know.(p3)
Table A provides a list of questions you need to answer to help you meet your federal tax obligations. After each question is the location in this publication where you will find the related discussion.
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The IRS mission.(p3)
Provide America's taxpayers top-quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all.
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Comments and suggestions.(p3)
We welcome your comments about this publication and your suggestions for future editions.
You can send us comments from IRS.gov/FormComments. Or you can write to:

Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224


Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.
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Ordering forms and publications.(p3)
Visit IRS.gov/FormsPubs to download forms and publications. Otherwise, you can go to IRS.gov/OrderForms to order current and prior-year forms and instructions. Your order should arrive within 10 business days.
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Tax questions.(p3)
If you have a tax question not answered by this publication, check IRS.gov and How To Get Tax Help at the end of this publication.
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Table A. What You Need To Know About Federal Taxes

(Note. The following is a list of questions you may need to answer so you can fill out your federal income tax return. Chapters are given to help you find the related discussion in this publication.)

What must I know   Where to find the answer
 
What kinds of federal taxes do I have to pay? How do I pay them? See chapter 1.
What forms must I file? See chapter 1.
What must I do if I have employees? See Employment Taxes in chapter 1.
Do I have to start my tax year in January, or can I start it in any other month? See Accounting Periods in chapter 2.
What method can I use to account for my income and expenses? See Accounting Methods in chapter 2.
What kinds of business income do I have to report on my tax return? See chapter 5.
What kinds of business expenses can I deduct on my tax return? See Business Expenses in chapter 8.
What kinds of expenses are not deductible as business expenses? See Expenses You Cannot Deduct in chapter 8.
What happens if I have a business loss? Can I deduct it? See chapter 9.
What must I do if I disposed of business property during the year? See chapter 3.
What are my rights as a taxpayer? See chapter 11.
Where do I go if I need help with federal tax matters? See chapter 12.

What's New for 2017(p4)

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The following are some of the tax changes for 2017.
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Maximum net earnings.(p4)
The maximum net self-employment earnings subject to the social security part of the self-employment tax remains $127,200 for 2017. There is no maximum limit on earnings subject to the Medicare part.
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Standard mileage rate.(p4)
For 2017, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 53.5 cents a mile. For more information, see Car and Truck Expenses in chapter 8.
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Sharing Economy Tax Center. (p4)
The sharing (or on-demand, gig, or access) economy refers to an emerging area of activity that involves people using technology advancements to arrange transactions that generate revenue from sharing assets or providing services upon request. Visit IRS.gov/Sharing to get more information about the tax consequences of participating in the sharing economy.
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Individual taxpayer identification number (ITIN) renewal.(p4)
If you were assigned an ITIN before January 1, 2013, or if you have an ITIN that you haven't included on a tax return in the last three consecutive years, you may need to renew it. For more information, see the Instructions for Form W-7.
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Access your online account.(p4)
You must authenticate your identity. To securely log in to your federal tax account go to IRS.gov/Account. View the amount you owe, review 18 months of payment history, access online payment options, and create or modify an online payment agreement. You also can access your tax records online.

What's New for 2018(p4)

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The following are some of the tax changes for 2018. For information on other changes, go to IRS.gov.
taxmap/pubs/p334-000.htm#en_us_publink1000267252
Standard mileage rate.(p4)
For 2018, the standard mileage rate for the cost of operating your car, van, pickup, or panel truck for each mile of business use is 54.5 cents a mile.
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Self-employment tax.(p4)
The maximum net self-employment earnings subject to the social security part of the self-employment tax is $128,400 for 2018.

Reminders(p4)

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taxmap/pubs/p334-000.htm#en_us_publink100025018
Accounting methods.(p4)
Certain small business taxpayers may be eligible to adopt or change to the cash method of accounting and may not be required to account for inventories. For more information, see Inventories in chapter 2.
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Reportable transactions.(p4)
You must file Form 8886, Reportable Transaction Disclosure Statement, to report certain transactions. You may have to pay a penalty if you are required to file Form 8886 but do not do so. You may also have to pay interest and penalties on any reportable transaction understatements. Reportable transactions include:
  1. Transactions the same as or substantially similar to tax avoidance transactions identified by the IRS,
  2. Transactions offered to you under conditions of confidentiality for which you paid an advisor a minimum fee,
  3. Transactions for which you have, or a related party has, contractual protection against disallowance of the tax benefits,
  4. Transactions that result in losses of at least $2 million in any single tax year ($50,000 if from certain foreign currency transactions) or $4 million in any combination of tax years, and
  5. Transactions the same or substantially similar to one of the types of transactions the IRS has identified as a transaction of interest.
For more information, see the Instructions for Form 8886.
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Small Business and Self-Employed (SB/SE) Tax Center.(p5)
Do you need help with a tax issue or preparing your return, or do you need a free publication or form? SB/SE serves taxpayers who file Form 1040, Schedules C, E, F, or Form 2106, as well as small business taxpayers with assets under $10 million. For additional information, visit the Small Business and Self-Employed Tax Center at IRS.gov/Businesses/Small.

Photographs of Missing Children(p5)

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The Internal Revenue Service is a proud partner with the National Center for Missing & Exploited Children® (NCMEC). Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.