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Taxes are never fun, but for solopreneurs and freelancers, they can feel like an entirely different language. When you work a traditional job (yes one with a W-2), your employer automatically withholds income tax, Social Security, and Medicare from your paycheck. As a solopreneur, none of that happens, it’s all on you to track, save, and pay.
That can sound intimidating, but it doesn’t have to be. Once you understand how the system works, filing your taxes as a solopreneur becomes much less overwhelming. The key is preparation. With the right information and tools, you can avoid surprise bills from the IRS, keep more of your hard-earned money, and even find deductions that reduce what you owe. We built Investrio to help out with all these details!
The first thing to know is that solopreneurs, like freelancers, content creators and many others, are considered self-employed in the eyes of the IRS. That means you’re not just responsible for income tax, but also the self-employment tax, which covers Social Security and Medicare contributions.
Another difference is timing. Instead of paying taxes once a year, many solopreneurs need to make quarterly estimated tax payments. If you skip these, you could face penalties, even if you pay your balance in full by April. On top of that, freelancers often have more deductions available to them, but they also face greater scrutiny if they mix personal and business expenses. So here is a cheatsheet of all the things you need to consider as you launch your career as a solopreneur:
Missing a tax deadline can result in penalties and interest, here are crucial to know the dates:
Freelancer income usually comes from multiple sources, which can make it harder to track. You may receive 1099-NEC forms from clients, but some may simply pay you through platforms like PayPal, Stripe, or Venmo without issuing a form. It’s your responsibility to report all of this income, even if you don’t get a 1099. Your bank statements and payment processor reports are your best friends here.
The IRS allows freelancers to deduct “ordinary and necessary” expenses related to running their business. This can include things like home office costs, internet and phone bills, software subscriptions, travel, marketing, and even part of your rent if you work from home. The more organized your records, the easier it will be to maximize deductions and reduce your taxable income.
Deductible categories include:
Freelancers are required to estimate and pay their taxes throughout the year, not just in April. A general rule of thumb is to set aside 25–30% of your income for federal taxes, and possibly more if you live in a state with high income tax rates. The IRS provides worksheets with Form 1040-ES that can help you calculate your quarterly payments.
When it’s time to file, you’ll typically need three forms:
Your accountant, or tax software can walk you through this step, but it’s still helpful to know what each form is doing behind the scenes. Investrio can also help with these!
The IRS accepts online payments through Direct Pay or the Electronic Federal Tax Payment System (EFTPS). Many freelancers also use tax filing software that allows you to pay directly when you submit your return. Electronic payments are the fastest, safest, and most reliable way to make sure your money gets where it needs to go.
Do solopreneurs really need to pay quarterly taxes?
Yes. If you expect to owe more than $1,000 in taxes, the IRS requires you to make estimated payments each quarter.
What happens if I don’t file taxes as a solopreneur?
Failure to file or pay can result in penalties, interest, and potentially IRS collection actions. Even if you can’t pay the full amount, it’s better to file on time and set up a payment plan.
How much should solopreneurs save for taxes?
Most financial professionals recommend setting aside 25–30% of your income for taxes. If you live in a state with high taxes like California or New York, aim closer to 30–35%. Investrio has a estimated calculator for you.
You don’t have to go it alone. There are tools that can simplify every step of the process:
Taxes don’t have to be scary. With the right preparation, clear records, and smart tools, you can file with confidence and keep more of your income. Whether you’re a freelancer, creator, or solopreneur, building good financial habits now makes every tax season easier.
Ready to simplify your taxes? Sign up for Investrio today.
Investrio is an is an AI-powered software that simplifies bookkeeping, invoicing, and cash flow management for growing service-based businesses.
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www.investrio.io
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