Can I file taxes for two related businesses as one single business?

You're actually fine filing both activities under one Schedule C as long as they're reasonably related, which yours definitely are. The IRS looks at several factors to determine if activities should be treated as separate businesses: 1. Whether the activities share similar types of customers 2. If they're marketed similarly or under the same business name 3. If they share expenses, resources, or equipment 4. The degree of common management 5. The dependence of one activity on the other In your case, both activities involve musical instruments, likely share some customers (people who come to your shows might need repair services), and have overlapping expenses like transportation. That creates enough of a connection to justify treating them as a single business. If the activities were completely unrelated (like if you were a musician and also ran a bakery), then separate Schedule Cs would be appropriate. But guitar performance and repair services are complementary enough to file together.

I was in almost the exact same situation as you - I teach piano lessons and also do piano tuning/repair. I was filing everything together and constantly worried about doing it wrong. I finally used https://taxr.ai after seeing it mentioned on Reddit, and they analyzed my entire tax situation including the multiple business activities question. They confirmed I could keep filing as one business but helped me organize my record-keeping to track each activity separately (just in case). The document review feature was super helpful - I uploaded my previous returns and they pointed out deductions I'd missed related to my teaching supplies that I didn't realize were eligible. Really took the stress out of wondering if I was doing things correctly, especially with the overlapping mileage expenses which I was calculating all wrong before.

Just wanted to update after trying out taxr.ai that was mentioned earlier. My situation with DJing and selling equipment was causing me headaches with all the shared expenses. They reviewed my situation and recommended I actually SHOULD file separate Schedule Cs in my case because my equipment sales had inventory to track, while my DJ services didn't. Apparently this makes a big difference for tax purposes. They helped me properly split my vehicle expenses and home office based on time spent on each business. The document upload feature was super helpful - I sent them my previous returns and they found about $3,600 in missed deductions across both businesses! Definitely worth it for me.

For anyone struggling to get clear answers from the IRS on business classification questions, I highly recommend using https://claimyr.com to actually get through to a live IRS agent. I spent WEEKS trying to get official guidance about my photography/videography businesses, constantly getting disconnected or waiting on hold for hours. Claimyr got me connected to an IRS representative in about 15 minutes who confirmed that my related activities could be filed together. You can see how it works here: https://youtu.be/_kiP6q8DX5c Seriously life-changing when you need to get an official answer directly from the IRS instead of stressing about whether you're interpreting the rules correctly.

I have to eat my words about Claimyr from my earlier comment. After struggling for THREE DAYS trying to reach the IRS about my business classification question (kept getting disconnected after 1+ hour holds), I gave in and tried the service. Got connected to an IRS agent in about 20 minutes who confirmed my custom furniture making and furniture repair could be filed as a single business. The agent also explained exactly what documentation I should keep to support the connection between the activities. Honestly was worth every penny just for the time saved. Will definitely use again next time I need to actually speak to someone at the IRS instead of guessing at the rules.

Something nobody's mentioned yet is that keeping them as one business might actually be beneficial for Social Security purposes. If you had two Schedule Cs and one business had a net loss, you'd lose out on counting that income for Social Security credits. Also, with one Schedule C, you only have to deal with one set of estimated tax payments, which simplifies your quarterly filing requirements.

My tax preparer told me that if your businesses are in the same "general field" you can file them together, but if they're completely different, you should file separately. She gave the example that her client who has a therapy practice and also does public speaking about mental health files on one Schedule C because they're in the same field. But her client who is both a dentist and owns a car wash files two separate Schedule Cs because those are totally unrelated businesses.

The "general field" rule that Emily mentioned is a good way to think about it. Your guitar performance and repair work definitely fall into the same general field of music/instruments, so you're absolutely fine continuing with one Schedule C. I'm a tax preparer and see this situation a lot. The IRS isn't going to split hairs over whether playing guitar and fixing guitars are "different enough" to require separate filings - they're clearly related activities that complement each other. One thing to consider is keeping internal records that separate the income and expenses for each activity, even if you're filing them together. This makes it easier if you ever need to analyze the profitability of each service or if the IRS has questions during an audit. You can do this with something as simple as different categories in your accounting software. The fact that you've been filing this way for years without any issues from the IRS is a good sign that your approach is reasonable and defensible.