1 John 1:8-10 (NKJV) If we say that we have no sin, we deceive ourselves, and the truth is not in us.  If we confess our sins, He is faithful and just to forgive us our sins and to cleanse us from all unrighteousness.  If we say that we have not sinned, we make Him a liar, and His word is not in us.
"If we say that we have no sin," John uses "sin" as a noun rather than a verb ("we do not sin") to emphasize sin as fundemental of human nature. There are those who affirm that sin does not exist as principle or power in human nature, or those who say the evil actions they commit are not really sin. We see this all around us. People walking about blind and unaware that they need a Saviour. They are self-deceived and the word of God is not in them.
Believers must be aware that the flesh or sinful nature is a constant threat in our lives and that we must always be putting to death its evil deeds through the Holy Spirit who dwells in us. Our faith is constantly threatened with a very subtle undermining that removes all vestiges of vital Christianity. And if we are satisfied to just be passive it will leave us dull, dead, and useless. So this letter of John's has tremendous significance for us.
1 John 1:9 This begs the questions "If forgiveness and cleansing are conditional on confessing our sins, then what happens if we don't confess our sins? Are they not forgiven? And if they aren't forgiven, then what are the consequences of that?" The strictest interpretation of this would lead to the belief that if there is any unconfessed sin in our lives, we would not be forgiven. Although some have interpreted this verse to say just that, this certainly is not what this means.
The word "confess" was translated from the Greek word "HOMOLOGEO." This was a compound word made up of the Greek words "HOMOU" and "LOGOS." HOMOU means "the same" (Strong's Concordance), as in "homosexual." LOGOS means "something said" (Strong's Concordance). So, HOMOLOGEO means "to speak the same thing" (Vine's Expository Dictionary). When we sin, we are not saying, thinking, or doing the same thing as the Lord. But when we confess our sins, we are turning from our way of thinking and agreeing with the Lord that what we have done was wrong.
Our sin doesn't separate us from the Lord as under the Old Testament (Isaiah 59:1-2). All of our sins have already been paid for (see my notes at Hebrews 9:12, 15; 10:10, 14; and 12:23). But as long as we walk in unconfessed sin, Satan has an inroad into our lives (see my note at Romans 6:16). We need to confess that sin, walk away from the thinking that got us into that mess, and agree with God that what we did was wrong. Then the forgiveness that is already a reality in our spirits becomes a reality in our flesh. This cleanses us from all the attack of the devil that we opened ourselves up to.
Satan can work in the flesh of believers who have unconfessed sin. Satan cannot exist in the flesh of believers who have confessed their sins and understand and believe they are totally forgiven and cleansed from all unrighteousness. See my note at Romans 5:21.
So, the confession of sins encouraged here is not for our eternal salvation, but to rid us of the inroad Satan gains into our lives through our sins. In a sense, Satan has a right to afflict us when we cooperate with him through sin (Romans 6:16). Confessing that what we did was sin and repenting of that action closes a door on the devil and opens the door to the Lord.
1 John 1:10 How could anyone claim they have not sinned? The only way I can understand this is that they would have to be taught this and enter into deception. Left to ourselves, our own hearts would convict us of all ungodliness and unrighteousness (Romans 1:18-19). It would have to be some religious doctrine like an extreme and errant teaching on grace that would convince people they are free to live any way they please. Those who adopt this position make God (and His Word) a liar because this is in clear violation of biblical teaching (Romans 3:23).