Small Business For use in preparing Tax Guide for

1 Userid: CPMS chema: tipxLeadpct: 100%Pt. size: 10 Draft Ok to PrintAH XSL/XMLF ileid: .. tions/P334/ 2017 /A/XML/Cycle04/source(Ini t. & Date) _____Page 1 of 54 13:40 - 29-Jan-2018 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before of the TreasuryInternal Revenue ServiceGet forms and other information faster and easier at: (English) (Espa ol) ( ) ( ) (Pусский) (Ti ngVi t) Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ)Publication 334 Catalog Number 11063 PFor use in preparing2017 ReturnsJan 29, 2018 Page 2 of 54 Fileid: .. tions/P334/ 2017 /A/XML/Cycle04/source13:4 0 - 29-Jan-2018 The type and rule above prints on all proofs including departmental reproduction proofs.

2 MUST be removed before 's New for 's New for of Missing 1. Filing and Paying Business (SE) 2. Accounting Periods and 3. Dispositions of Business Is a Disposition of Property?..17 How Do I Figure a Gain or Loss?..18 Where Do I Report Gains and Losses?..18 Chapter 4. General Business To Claim the 5. Business of That Are Not for Selected for Your 6. How To Figure Cost of Goods Cost of Goods Sold on Schedule C, Lines 35 Through 7. Figuring Gross To Gross Profit to Gross 8. Business and Truck ' and Professional , Meals, and Use of Your Expenses You Can You Cannot 9. Figuring Net Profit or Operating Losses (NOLs)..41 Not-for-Profit 10. Self-Employment (SE) Must Pay SE Tax?

3 41 Reporting Self-Employment 11. Your Rights as a Bill of , Appeals, Collections, and 12. How To Get More Business Federal To Get Tax DevelopmentsFor the latest information about developments related to Pub. 334, such as legislation enacted after it was published, go to publication provides general information about the federal tax laws that apply to you if you are a self-em-ployed 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 publication does not cover the topics listed in the following table. IF you need information about:THEN you should see:Corporations ..Pub. 542 Business 225 Fishermen (Capital Construction Fund).

4 Pub. 541 Passive 527S for Form 1120 SStarting a 583 Are You Self-Employed?You are a self-employed person if you carry on a trade or Business as a sole proprietor or an independent do not have to carry on regular full-time busi-ness activities to be self-employed. Having a part-time Business in addition to your regular job or Business may be !Page 2 Publication 334 ( 2017 )Page 3 of 54 Fileid: .. tions/P334/ 2017 /A/XML/Cycle04/source13:4 0 - 29-Jan-2018 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before or Business . A trade or Business is generally an activity carried on to make a profit. The facts and circum-stances of each case determine whether or not an activity is a trade or Business .

5 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 fur-ther the interests of your liability company (LLC). A limited liability company (LLC) is an entity formed under state law by fil-ing articles of organization. Generally, for income tax pur-poses, a single-member LLC is disregarded as an entity separate from its owner and reports its income and de-ductions on its owner's federal income tax return. For ex-ample, if the single-member LLC is not engaged in farm-ing and the owner is an individual, he or she may use Schedule C or proprietor. 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 li-ability company (LLC) unless you elect to have the LLC treated as a contractor.

6 People such as doctors, den-tists, 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 indi-vidual is an independent contractor if the person paying for the work has the right to control or to direct only the re-sult 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 inde-pendent contractor, see Pub.

7 15-A, Employer's Supple-mental Tax You a Statutory Employee?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 Owned and Operated by SpousesIf 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, Return of Partnership Income. For more information, see Pub. 541, Community income. If you and your spouse wholly own an unincorporated Business as community property under the community property laws of a state, foreign country, or possession, you can treat the Business either as a sole proprietorship or a partner-ship.

8 States with community property laws include Ari-zona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. A change in your re-porting position will be treated as a conversion of the en-tity. See Pub. 555 for more information about community property Qualified joint venture. 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.

9 For an explanation of "material partici-pation," see the instructions for Schedule C, line 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 InformationWhat you need to know. Table A provides a list of questions you need to answer to help you meet your fed-eral tax obligations. After each question is the location in this publication where you will find the related IRS mission. Provide America's taxpayers top-qual-ity service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fair-ness to and suggestions.

10 We welcome your com-ments about this publication and your suggestions for fu-ture can send us comments from Or you can write to:Internal Revenue ServiceTax Forms and Publications1111 Constitution Ave. NW, IR-6526 Washington, DC 20224 Although we cannot respond individually to each com-ment received, we do appreciate your feedback and will consider your comments as we revise our tax forms and publications. Visit to download forms and publications. Other-wise, you can go to to order current and prior-year forms and instructions. Your order should arrive within 10 Business questions. If you have a tax question not answered by this publication, check and How To Get Tax Help at the end of this 334 ( 2017 ) Page 3 Page 4 of 54 Fileid.