Daily Archives: October 13, 2025

If you are self-employed, it’s really important that you fully understand your responsibilities when it comes to paying taxes. Here are some tips that can help you stay on track and out of any disputes with state and federal tax officials.

Income Taxes

As a sole proprietor, you are not required to file a separate income tax return for the business. However, you must summarize your business income and expenses on Schedule C of your personal income tax return.

It’s important that you keep full and accurate records of your income and expenses. Deducting all of your ordinary and necessary business expenses helps minimize your tax liability. Any losses your business has are generally deductible against your other income, subject to special rules relating to hobby losses, passive activity losses, and activities for which you were not “at risk.”

Self-Employment Taxes

As a self-employed person, you must pay both shares of FICA (Social Security and Medicare) taxes, though these are partially deductible. The rates are as follows for 2025:

• Social Security — 12.4% of the first $176,100 of net self-employment earnings
• Medicare — 2.9% of all net self-employment earnings*

The maximum 15.3% self-employed tax rate applies to the first $176,100 of self-employed income in 2025.

Estimated Tax Payments

Your net self-employment income will be taxable whether or not you withdraw cash from your business account. In addition, it’s likely that you’ll face penalties if you don’t make appropriate quarterly estimated tax payments.

The Deductibility of a Home Office

If you work out of a home office, you may be able to deduct a portion of the costs that you spend to maintain your home as well as any commuting expenses that you may have incurred while traveling from your home office to another work location.

Health Insurance Premiums

Once you meet the tax law requirements, you can deduct up to 100% of your health insurance premiums as a trade or business expense. That includes premiums paid for your spouse, dependents, and children under age 27.

Retirement Savings

As a sole proprietor, you can establish a retirement plan. Solo 401(k) plans and simplified employee pension (SEP) plans are popular among the self-employed. Your contributions to these and other types of retirement plans are tax deductible within certain limits.

Talk to us, let’s see how we can help you manage your taxes. Together, we can ensure that you are on top of your tax obligations and that you are maximizing the tax opportunities that are available to you as a self-employed business owner.

With the rise of the gig economy, more people are turning to side gigs to supplement their income. Whether you’re driving for a rideshare service, selling handmade crafts online, freelancing, or offering consulting services, earning extra money can be exciting but it also comes with tax responsibilities. Here’s what you need to know about your tax obligations when starting a side gig.

1. You’re Likely Considered Self-Employed

If you’re working a side gig and are not classified as an employee, the IRS generally considers you a self-employed individual. This means you’re running a business, even if it’s small or part-time, and you’re responsible for tracking your income and expenses.

2. Reporting Income

You must report all income earned from your side gig, even if you don’t receive a 1099 form. Many platforms, such as Etsy, Uber, and Upwork, issue a 1099-K or 1099-NEC if you earn more than a certain amount. However, it’s your responsibility to report all income, whether it’s paid via cash, check, or digital platform.

3. Self-Employment Tax

As a self-employed individual, you’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes collectively known as self-employment tax. For 2024, this rate is 15.3%. You’ll calculate this using Schedule SE and pay it in addition to your regular income tax.

4. Quarterly Estimated Taxes

If you expect to owe $1,000 or more in taxes for the year (after subtracting withholding and credits), the IRS requires you to make estimated quarterly payments. These are due in April, June, September, and January. Failing to pay them could result in penalties and interest.

5. Business Expense Deductions

The good news is you can deduct ordinary and necessary expenses related to your side gig. This might include:

• Office supplies
• Business mileage
• Software or subscriptions
• Home office expenses
• Marketing and advertising costs

Make sure to keep detailed records and receipts to substantiate these deductions.

6. Separate Finances

To make tax time easier, consider opening a separate bank account for your side gig. This helps clearly separate business and personal expenses and makes bookkeeping and tax filing more straightforward.

7. Local and State Taxes

Don’t forget that you may also owe state and local taxes, including income tax, sales tax (if you sell products), or business licenses and fees, depending on where you live and the nature of your work.

8. Filing Your Taxes

You’ll typically file a Schedule C (Profit or Loss from Business) along with your personal tax return (Form 1040). If your gig becomes more substantial, you might explore forming an LLC or electing S-Corp status for tax benefits, but these decisions should be made with professional advice.

Final Thoughts

Taking on a side gig can be a great way to boost your income and pursue passions. But it’s important to stay ahead of your tax obligations to avoid surprises during tax season. Consider consulting a tax professional, especially in your first year, to ensure compliance and maximize your deductions.

Running a business involves more than just managing operations, serving customers, and growing revenue. Business leaders also need to navigate a constantly evolving landscape of tax regulations, labor laws, and financial reporting rules. Staying up to date with these changes is critical, not only for compliance, but also for avoiding penalties and making informed strategic decisions.

While it’s impossible to predict every policy shift, there are strategies that can help business owners and managers stay ahead of the curve.

1. Build a Routine for Regular Updates

Policies and regulations can change frequently, and missing even a small update can have major consequences. Establish a regular routine for reviewing relevant information. This could include:

• Subscribing to newsletters from professional organizations, accounting firms, or business associations
• Setting aside time each week or month to check updates from government agencies
• Using alert tools or RSS feeds to receive notifications about changes in regulations

A consistent approach ensures you are always aware of shifts that may affect your business, rather than reacting after the fact.

2. Leverage Professional Networks

Networking isn’t just for sales and marketing, it’s also a valuable resource for staying informed about policy changes. Accountants, lawyers, and industry peers often share insights about regulatory developments. Consider:

• Joining local or national business associations
• Participating in online forums or industry-specific groups
• Attending webinars or workshops focused on compliance and business operations

These networks can provide early warnings about changes and practical advice on how to adjust your business practices accordingly.

3. Partner with Professionals

Tax advisors, accountants, and business consultants are trained to monitor regulatory developments as part of their daily work. Partnering with these professionals gives your business access to specialized knowledge and guidance.

Rather than trying to track every change on your own, rely on experts to interpret updates, explain how they affect your business, and recommend actionable steps. A strong professional relationship can prevent costly mistakes and help you make strategic decisions with confidence. Check out Boca Tax Prep.

4. Use Technology and Tools

Modern technology makes it easier to stay on top of policy changes. Tools such as compliance software, accounting platforms, and news aggregators can provide:

• Real-time alerts about regulatory updates
• Automated reminders for filing deadlines
• Access to summaries and guidance for new rules

Investing in technology helps streamline the monitoring process and reduces the risk of human error. Many platforms can also integrate with payroll and accounting systems, ensuring your operations stay aligned with current requirements.

5. Educate Your Team

Staying compliant is not just the responsibility of the business owner, it involves the whole team. Regularly train employees on relevant processes and policies, and encourage them to flag changes or discrepancies. This approach:

• Promotes a culture of compliance
• Helps ensure policies are consistently applied across departments
• Reduces the likelihood of errors in payroll, accounting, or reporting
• Empowering staff to stay informed creates multiple layers of vigilance within the organization.

6. Review Policies Periodically

Even with routine updates and professional guidance, it’s important to periodically review your internal policies and procedures. Regular reviews allow you to assess whether current processes are aligned with regulatory requirements and identify areas for improvement.

Consider setting quarterly or annual reviews to:

• Audit payroll, accounting, and HR practices
• Check that compliance procedures are followed consistently
• Update internal documentation to reflect any changes in laws or best practices

Final Thoughts

Tax and business-related policy changes are a constant in today’s business environment, but staying on top of them is possible with a proactive approach. Building a routine for updates, leveraging professional networks, partnering with experts, using technology, educating your team, and reviewing internal policies are all strategies that help businesses remain compliant and agile.

By taking a structured and consistent approach, business leaders can reduce risk, make informed decisions, and focus on what matters most. Contact us today to keep your business running and growing with confidence.