Tax season can be a stressful time, especially for self-employed professionals juggling multiple responsibilities. Without an employer to handle tax withholdings, it’s up to you to ensure everything is accurate and on time. The good news? With a little preparation, you can make tax season smooth and even maximize your deductions.
Here’s a step-by-step guide to help you get ready for tax season:
1. Organize Your Income Records
As a self-employed professional, you’ll need to report all sources of income. This typically includes:
- 1099-NEC forms for contract work
- Invoices and payment records from clients
- Earnings from side hustles or freelance projects
Pro Tip: Use accounting software like QuickBooks or Wave to track income year-round. It’s easier than scrambling at the last minute.
2. Track Your Expenses
Self-employed professionals can deduct a wide variety of business expenses, but only if you keep accurate records. Common deductions include:
- Office supplies and equipment
- Home office expenses (a portion of rent, utilities, or mortgage)
- Mileage and travel expenses
- Marketing and advertising costs
- Professional development and education
Pro Tip: Keep digital or physical copies of receipts and categorize them by type. Apps like Expensify can simplify this process.
3. Estimate and Pay Quarterly Taxes
The IRS requires self-employed individuals to pay estimated taxes quarterly. If you haven’t been doing this, you could face penalties.
How to Catch Up:
- Calculate how much you’ve earned so far and estimate what you owe.
- Submit any unpaid quarterly taxes before the year-end to minimize penalties.
4. Keep Track of Tax Deadlines
Mark key dates on your calendar to avoid penalties and interest. For most self-employed professionals, these include:
- Quarterly Tax Deadlines: Typically in April, June, September, and January
- Annual Tax Deadline: April 15 (or the next business day if it falls on a weekend)
Pro Tip: Consider setting reminders a few weeks in advance to ensure you have time to prepare.
5. Understand Self-Employment Tax
As a self-employed professional, you’re responsible for both the employer and employee portions of Social Security and Medicare taxes—together known as self-employment tax (15.3%).
How to Plan:
- Use IRS Form 1040-ES to calculate your estimated taxes.
- Work with a tax professional to ensure you’re not overpaying or underpaying.
6. Take Advantage of Tax Deductions
One of the biggest benefits of being self-employed is the opportunity to reduce your taxable income through deductions. In addition to the expenses listed earlier, don’t forget:
- Health Insurance Premiums: If you pay for your own insurance, it’s deductible.
- Retirement Contributions: Contributions to a SEP IRA or Solo 401(k) can reduce your taxable income.
- Business Use of Home Deduction: If you have a dedicated workspace at home, you can deduct a percentage of your household expenses.
7. Gather the Right Forms
To file your taxes, you’ll need:
- Form 1040: Your individual tax return
- Schedule C: To report business income and expenses
- Schedule SE: To calculate self-employment tax
Pro Tip: If you’ve hired contractors, you’ll also need to issue 1099-NEC forms for payments over $600.
8. Work with a Professional
Self-employed taxes can be complex, and mistakes are costly. A professional bookkeeper or tax preparer can:
- Ensure your deductions are accurate
- Help you avoid IRS penalties
- Save you time and money in the long run
At Jeffrey Plante Bookkeeping and Tax Service, we specialize in helping self-employed professionals like you prepare for tax season. From organizing records to maximizing deductions, we make sure you’re ready for April 15—and beyond.
Make Tax Season Stress-Free
Don’t wait until the last minute to get your finances in order. Contact us today for a free consultation and learn how we can help you simplify tax season, so you can focus on growing your business.
