Being your own boss has plenty of perks—flexibility, freedom, and the satisfaction of building something that’s yours. But it also means taking charge of responsibilities an employer would normally handle, especially when it comes to taxes.

Whether you’re a freelancer, consultant, or small business owner, staying on top of your tax strategy is key to keeping more of what you earn and avoiding year-end surprises. Here’s what to know.

Understand the Self-Employment Tax

When you work for yourself, no one is withholding taxes from your paycheck. That means you’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes—together known as the self-employment tax, which totals 15.3% of your net earnings.

If you earn at least $400 from self-employment, you’ll need to file Schedule C with your Form 1040 to report income and expenses, then calculate self-employment tax using Schedule SE.

Pay Estimated Taxes Quarterly

Unlike traditional employees, you don’t have automatic withholdings. Instead, you’re expected to make quarterly estimated tax payments to cover both income and self-employment taxes.

The IRS quarterly payment deadlines are:

• April 15 – for income earned January through March
• June 15 – for April through May
• September 15 – for June through August
• January 15 (of the next year) – for September through December

If you expect to owe more than $1,000 in taxes for the year, making these payments helps you avoid penalties and keeps cash flow consistent.

Hiring Family? Know the Rules

Bringing family members into your business can make financial and operational sense—plus, it may lower your taxable income. Wages paid to your spouse or children are typically deductible as business expenses.

That said, the IRS pays close attention to family payrolls, so be sure to:

• Pay a reasonable wage for the work performed
• Ensure your family member actually works for the business
• Keep payroll records and withhold taxes if required

If you hire your kids, special rules may apply based on their age and your business structure. For example, wages paid to children under 18 by a sole proprietorship are exempt from Social Security and Medicare taxes. Always check with a tax professional before finalizing arrangements.

Save for Retirement (Because No One Else Will)

When you’re self-employed, retirement planning is entirely up to you—but there are great tax-advantaged options available:

• SEP IRA: Simple to set up, allows contributions up to 25% of your net earnings (up to $70,000).
• Solo 401(k): Ideal for higher earners; you can contribute up to the annual employee limit plus up to 25% of your net self-employment income as the employer, with a total cap near $70,000.
• SIMPLE IRA: Best for small businesses with employees, offering matching contributions and easy administration.

Each plan can help reduce your taxable income while building long-term savings.

Tip: Automate your contributions—treat them like any other business expense.

Maximize Business Deductions

Every legitimate business expense can help lower your tax bill. Keep detailed records, track receipts, and don’t overlook these common deductions:

• Home Office: Deduct $5 per square foot (up to 300 sq. ft.) using the simplified method, or calculate actual expenses for mortgage, utilities, and maintenance.
• Office Supplies & Equipment: Computers, printers, software, and even internet costs may qualify.
• Travel & Meals: Business travel is 100% deductible; meals are typically 50% if related to client meetings or business activities.
• Health Insurance Premiums: If you pay for your own coverage, you can often deduct 100% of the premiums.
• Continuing Education: Courses, conferences, or certifications that improve your business skills can be deductible.

Pro tip: Use bookkeeping software like QuickBooks or Wave to track expenses in real time—it saves you stress at tax time.

Stay Informed About Tax Law Changes

Tax rules for self-employed individuals evolve frequently. Recent IRS updates now require reporting payment app transactions—if you earn more than $600 from platforms like PayPal or Venmo for business activity, you’ll receive a Form 1099-K, and it must be reported as income.

Other potential changes could affect deduction limits, retirement contribution caps, or health insurance credits. Working with a trusted tax advisor ensures you stay compliant and make the most of available opportunities.

Plan Ahead and Protect Your Bottom Line

Running your own business gives you independence—but that independence comes with extra responsibility. Staying proactive with tax planning, maintaining organized records, and leveraging deductions can make tax season far less stressful (and far less expensive).

And when in doubt, get help before you need it. A good advisor can often save you more in taxes than they cost in fees.

Ready to Simplify Your Tax Planning?

If you’re self-employed and want to make sure your financial strategy is as efficient as your business, Navalign Wealth Partners can help. We’ll help you build a personalized plan for tax savings, retirement, and long-term financial success—so you can focus on doing what you love.

Reach out to Navalign Wealth Partners today for expert guidance tailored to self-employed professionals.