Expert Accounting Services for Solopreneur Business Owners

Reducing your tax burden requires strategic planning. Here’s how you can legally lower your taxes:

• Maximize Business Deductions – Deduct business expenses such as home office costs, marketing, professional development, software, and travel.
• Contribute to a Self-Employed Retirement Plan – A Solo 401(k) or SEP IRA allows you to save for retirement while reducing taxable income.
• Use Section 179 Depreciation – If you buy business equipment (e.g., laptops, office furniture), you can deduct the full cost in the year of purchase instead of spreading it over time.
• Take Advantage of the Qualified Business Income Deduction (QBI) – Certain solopreneurs may qualify for a 20% deduction on business profits.
• Track and Deduct Business Mileage – If you use your personal vehicle for business, you can deduct mileage at the IRS-approved rate.

A tax professional can help optimize these strategies and ensure you’re not overpaying taxes.

Mixing personal and business finances is one of the biggest mistakes solopreneurs make. Here’s how to keep them separate:

• Open a Business Bank Account – Use this account for all business income and expenses.
• Get a Business Credit Card – Charge business expenses separately from personal spending.
• Use Accounting Software – Tools like QuickBooks, FreshBooks, or Xero can help categorize transactions properly.
• Pay Yourself a Salary or Owner’s Draw – Instead of withdrawing money randomly, set a structured payment plan for yourself.

Keeping finances separate helps you track profitability, maximize deductions, and avoid IRS scrutiny.

This decision depends on your business goals, liability concerns, and tax situation.

• Sole Proprietorship

  • Pros: Simple to set up, minimal paperwork, fewer fees
  • Cons: You are personally liable for business debts and lawsuits

• LLC (Limited Liability Company)

  • Pros: Protects your personal assets from business liabilities, more professional image
  • Cons: More paperwork, may have additional state fees

For some solopreneurs, forming an LLC and electing S-Corp taxation can reduce self-employment taxes. Consulting with a CPA can help you make the best choice.

Yes, if you expect to owe $1,000 or more in taxes, you must pay estimated taxes quarterly.

Since solopreneurs don’t have an employer withholding taxes from their paycheck, they must make these payments on their own.

• Due Dates for Estimated Tax Payments:
  • April 15 (for January – March income)
  • June 15 (for April – May income)
  • September 15 (for June – August income)
  • January 15 (of the following year) (for September – December income)

Failure to make estimated payments can result in IRS penalties and interest charges. A CPA can calculate your quarterly tax payments accurately to help you avoid surprises.

You can deduct any ordinary and necessary business expense. Common deductions include:

• Home Office Deduction – If you use part of your home exclusively for business, you may qualify for a deduction.
• Marketing & Advertising – Website hosting, paid ads, social media promotion, and branding costs are deductible.
• Business Software & Tools – Subscriptions to QuickBooks, Adobe, Zoom, or CRM software are eligible expenses.
• Professional Development – Courses, certifications, and books related to your business can be deducted.
• Health Insurance Premiums – Self-employed individuals can deduct their health insurance costs.

Properly tracking these expenses ensures you don’t miss valuable tax savings.

A general rule is to set aside 25-30% of your income for taxes. However, the exact amount depends on:

• Your business profits
• Whether you qualify for deductions and credits
• Your state’s tax rates

A CPA can help you estimate tax liability accurately so you save the right amount.

Yes, but you must follow IRS rules for independent contractors.

• If you pay a contractor $600 or more in a year, you must file a 1099-NEC form for them.
• Contractors are responsible for their own taxes, so you don’t need to withhold income tax or Social Security.
• Keep records of all payments and contracts to ensure compliance.

We help solopreneurs track contractor payments and issue proper tax forms.

Not always, but an EIN (Employer Identification Number) is recommended if you:

• Plan to hire employees or contractors
• Want to open a business bank account
• Have an LLC or S-Corp

Even if you’re a sole proprietor, getting an EIN can help you keep your Social Security Number private and look more professional.