Industry
Tax work for freelancers, consultants, and creators
Nobody withholds anything from your income, so you are the payroll department, and the first return is usually the one that teaches you what that means.
Working for yourself changes the tax return more than it changes the work. The income arrives gross, the deductions are yours to prove, and the tax is due four times a year, on a schedule that has nothing to do with when clients pay you. People who are excellent at what they do are often surprised in April, and they are almost never surprised by the income. They are surprised by the tax on it.
I do the work myself, and the aim is that you understand the structure, not just trust the number.
The tax you did not know about
Self-employed people pay both halves of Social Security and Medicare, 15.3% on 92.35% of net earnings up to the Social Security wage base, then 2.9% Medicare beyond it, on top of income tax. Half of that self-employment tax comes back as a deduction, which softens it without removing it. This is why a first self-employed year with a decent profit often produces a bill that feels out of proportion to the income. It is not a mistake. It is the missing employer.
Income is taxable whether or not a platform sends you a form. A client that forgets a 1099, or a marketplace that issues one below its threshold, changes your paperwork and not your obligation.
Quarterly estimates, done on purpose
The penalty for underpaying is not charged on what you owe in April. It is charged quarter by quarter on what you should have paid by each due date. The safe harbors give you a target that cannot be argued with: pay at least the smaller of 90% of this year’s tax or 100% of last year’s, or 110% if last year’s adjusted gross income was above $150,000. For a freelancer whose year is lumpy, the prior-year safe harbor is often the calmer choice, because you know that number now. The full walk-through is in Quarterly Estimated Taxes, in Plain English.
What I look at on a self-employed return
- Schedule C, with income and expenses that reconcile to a bank account, not to memory
- A home office that passes the exclusive-use test, and the simplified method when it is the better answer
- Business use of a vehicle, with a mileage log that existed before the audit letter did
- The self-employed health insurance deduction, the qualified business income deduction, and the deduction for half of self-employment tax
- A retirement plan that fits irregular income: a SEP-IRA, or a solo 401(k) with its own deadlines
- Equipment and software under the de minimis safe harbor election and Section 179
- Sales tax and state-level requirements for the things you sell
- The point at which an S corporation starts to pay for itself, and the point where it does not
When an S corporation is worth it, and when it is not
An S corporation can cut self-employment tax by letting you take part of your profit as distributions instead of wages, but only after paying yourself a reasonable salary, running payroll, filing a separate corporate return, and covering the extra cost of all of it. At lower profits that arithmetic loses. At higher ones it often wins. The honest answer comes from your numbers, and I will run them before suggesting it. The decision framework is in S-Corp vs. LLC: How to Actually Decide.
Books, in the meantime
The return is only as good as the records under it. If your business account and your personal spending share a card, the first piece of work is separating them, and it is cheaper to do on January 2 than on April 10. I can set up QuickBooks or work with whatever you already use, and clean up a year that got away from you. After that, a monthly check of the books keeps the quarterly estimate honest, which is the part most people are missing.
Fees follow the same flat-fee method as everything else here: a score from the number of income sources, states, forms, and transactions, quoted in writing before I begin.
Further reading
Questions, answered plainly.
I started freelancing mid-year. What should I do right now?
Open a separate business account if you have not, keep every receipt and invoice, and make an estimated payment sized to the profit so far. Waiting until April turns a manageable amount into a bill plus a penalty.
Do I need an LLC to freelance?
No. You can operate as a sole proprietor with no filing. An LLC is a liability and credibility decision more than a tax decision, and it does not change your income tax by itself.
What can I actually deduct?
Ordinary and necessary costs of the business, supported by records: software, equipment, professional fees, a qualifying home office, business mileage, advertising, a share of internet and phone, and retirement contributions. Personal spending that happens to use your business card is not deductible, and the records are what decide it.
My income swings a lot. How do I pay estimates?
Use the annualized income method for a lumpy year, or the prior-year safe harbor for a predictable floor. I will set the method with you in the planning conversation and adjust it as the year unfolds.
The first conversation is free.
Tell me what's going on and I'll tell you plainly whether you need me.
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