What is IRS Publication 334: Tax Guide for Small Business?

IRS Publication 334: Tax Guide for Small Business is a guide for individuals who are required to fill out Schedule C to report income. Published by the Internal Revenue Service (IRS), the guide is a reference for people who operate as the sole proprietor of a small business or as a statutory employee. IRS Publication 334 provides details on how to calculate common business deductions, take business tax credits available to a small businesses, and other vital information.

Understanding IRS Publication 334: Tax Guide for Small Business

IRS Publication 334 is a guide that pertains specifically to small business owners who are self-employed. The guide also applies to statutory employees, such as independent contractors, who are able to deduct business expenses through a Schedule C form. Publication 334 is refreshingly straightforward, giving business owners clear examples of how their business activities should be captured from a tax filing perspective.

Key Takeaways

  • IRS Publication 334: Tax Guide for Small Business is a clearly written reference for sole proprietors and independent contractors who file a Schedule C form.
  • Publication 334 is full of clear examples of how to handle a variety of small business operations for the purpose of filing taxes.
  • Publication 334 also includes a chapter on the business credits a small business can claim and how to claim them.

As the document name suggests, IRS Publication 334: Tax Guide for Small Business provides small business owners with information on federal tax law as it applies to their businesses. It outlines different deductions that small business owners can take and provides clear guidance on how to calculate and report basic items such as cost of goods sold, gross profit, and operating expenses. In addition to covering the tax treatment on both business income and expenses, IRS Publication 334 also indicates what forms the taxpayer needs to fill out, what business income needs to be reported, what accounting method the business owner should use, and what to do if a business is sold or dissolved during the year.

IRS Publication 334 covers tax information for both full- and part-time ventures. The IRS also publishes specific guides for S Corporations, partnerships, farmers and fishermen, corporations, residential rental property income, and income from passive activities.

Navigating IRS Publication 334: Tax Guide for Small Business

IRS Publication 334 is intentionally written to be accessible to a wide range of business owners rather than as a tax document aimed at professional accountants. New business owners and people considering becoming a sole proprietor will benefit from reading the complete guide at least once. After you are familiar with the guide, there is a "What's New" section updated each year with any significant changes. When the guide references a particular tax credit or schedule, it also gives the form number for you to look up on the IRS website for further information.

Other Federal Resources for Small Businesses

The last chapter of IRS Publication 334: Tax Guide for Small Business highlights additional assistance offered by the federal government to small business owners through the Small Business Administration or the SBA. This autonomous U.S. government agency provides assistance to small businesses and also promotes the larger economy through supporting small businesses. 

The SBA has programs that include financial and federal contract procurement assistance, management assistance, and specialized outreach to women, minorities and armed forces veterans. Currently, the SBA also has a program that provides loans to victims of natural disasters.

The organization mostly services small businesses with a variety of resources available on the agency's website, including a small business planner and additional training programs. The SBA offers in-person and one-on-one consulting services at locations throughout the United States, Puerto Rico, the U.S. Virgin Islands and Guam. Individuals can get support in business plan writing instruction and receive assistance with small business loans.

Along with educational services, the SBA has a well-known loan program. The SBA does not award grants or issue direct loans itself. Instead, the SBA guarantees against default aspects of business loans extended by banks and other official lenders that meet the agency's guidelines. This loan program enables small businesses to access loans with longer repayment periods.