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Self-Employment

  1. Self-Employed Person
  2. Independent Contractor
  3. Gig Economy
  4. SEP IRA Plan
  5. IRS Publication 334
  6. Self-Employment
  7. Freelancer
  8. Self-Employment Tax

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IRS Publication 334: Tax Guide for Small Business

Updated: February 20, 2023

While completing your small business’s tax reports, it’s critical to stay entirely up to date on new tax deductions, filing and paying business taxes, and accounting periods and procedures. Along with things such as business income, general business credits, and cost of goods sold calculations.

And IRS Publication 334 can help you with this. 

Read on as we take a closer look at IRS Publication 334: Tax Guide for Small Business.

List IconTable of Contents


    KEY TAKEAWAYS

    • IRS Publication 334 provides instructions on how small businesses report their income for the year on federal income tax returns
    • It provides information on how sole proprietors and single-member LLCs report their income on Schedule C, including business deductions, credits, and self-employment tax

    What is IRS Publication 334?

    IRS Publication 334: Tax Guide for Small Business provides directions to those who need to complete Schedule C to report income. It is a guide for those who operate as a sole proprietor of a small business and those who are statutory employees. It outlines rules for business tax credits, as well as common business deduction calculations, self-employed tax and other information.

    Save 40 Hours During Tax Season

    What Does IRS Publication 334 Include?

    Publication 334 provides small business owners information about how federal tax law impacts their business. The form provides specific information about the tax deductions small business owners can take. It also outlines how to calculate and then report gross profit, cost of goods sold, operating expenses, and other information. It outlines which forms taxpayers must fill out including what type of business income requires reporting and the accounting methods small business owners should use. It also provides information about reporting if the company is dissolved or sold.

    What is a Schedule C form?

    Taxpayers can use Schedule C, and attach it to Form 1040, to report income or losses for a small business if operated as a sole proprietor. Business activity includes any activity engaged in with the goal of creating an income or profit and the taxpayer is actively engaged in that business with regularity. This is a common component of federal income tax returns required for income tax purposes.

    Handling Small Business Operations For Filing Taxes

    Schedule C provides small business owners with a simple way to report income tax. It also allows for reporting personal income taxes alongside sole proprietor income. If you work as an independent contractor and receive a 1099, you may be able to use Schedule C to file taxes. This form cannot be used for corporate income tax reporting.

    It's Time For Owners To Own Tax Season

    What Are Business Credits?

    Small business credits are the amount a company can subtract from the taxes owed to the IRS. These are credits applied towards owed taxes. Businesses apply these at the time of completing their annual tax return. This could help offset a company’s financial obligation. They may include credits for certain industries, supporting certain populations through employment, or providing daycare facilities onsite.

    How Can A Small Business Claim Business Credits?

    Some businesses may be able to apply a tax deduction on interest and fees paid on business card use. 

    It’s important that you remember the need to include IRS Form 3800 with your tax return. This is if you qualify for more than one small-business tax credit. Each and every small-business tax credit for which your company may qualify is listed on this form. So by filling it out and returning it to the IRS, you can claim the small business credits that you’re eligible for. 

    Summary

    IRS Publication 334 provides instructions on how small businesses can report their income to the IRS each year. It outlines business credits and deductions. It also provides instructions for who must report income and how to calculate net profit or loss.

    Less Taxin'. More Relaxin'
    Sandra Habinger headshot

    Written by Sandra Habiger

    Sandra Habiger is a Certified Public Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Learn more about her work at http://www.sixfiguresaccounting.com/ .

    Sandra Habinger headshot

    Written by Sandra Habiger

    Sandra Habiger is a Certified Public Accountant with a Bachelor’s Degree in Business Administration from the University of Washington. Sandra’s areas of focus include advising real estate agents, brokers, and investors. She supports small businesses in growing to their first six figures and beyond. Learn more about her work at http://www.sixfiguresaccounting.com/ .

    FAQs on IRS Publication 334

    How do you write off business expenses?

    Once you determine if the expense is a qualifying or non-qualifying cost of business, you can then add up all qualifying expenses to determine the total business expenses deduction. This is then added to Schedule C, which is used for employed, self-employed, and small business income tax for those operating as a single-member LLC or sole proprietor.

    What does the IRS consider a small business?

    The Internal Revenue Service considers a company a small business if the business has assets under $10 million.

    What tax deductions can I claim without receipts?

    It is allowable to deduct business-related expenses even when the receipts for them are not available. For example, you can use a standard mileage rate for car expenses instead of actual costs. The IRS expects these to be reasonable and credible.

    How can a small business reduce their taxes?

    Small businesses that best understand tax deductions and credits and make use of all that they qualify for may reduce how much tax they must pay.

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