Tax Tips for Solopreneurs: A Guide to Filing as a One-Person Business

Being a solopreneur means you're in charge of everything—from marketing and operations to managing your finances. One of the most important (and often intimidating) responsibilities is filing your taxes. But with the right knowledge and preparation, you can not only stay compliant but also maximize your deductions and minimize your tax burden.

In this comprehensive guide, we’ll break down how taxes work for solopreneurs, what deductions you can claim, how to file, and pro tips to help you keep more of what you earn.

What Is a Solopreneur?

A solopreneur is an individual who runs a business entirely on their own. Unlike freelancers or contractors who may work for clients temporarily, solopreneurs are often building long-term businesses as sole owners with no employees.

Common solopreneur businesses:

Coaches and consultants
Online store owners
Bloggers and content creators
Freelance designers and developers
Virtual assistants

As a solopreneur, you’re responsible for reporting income, tracking expenses, paying estimated taxes, and managing your own benefits and retirement.

How Taxes Work for Solopreneurs

Solopreneurs typically operate as sole proprietors or single-member LLCs by default. This means the IRS considers you a “pass-through” entity, where all profits and losses are passed to your personal tax return.

You’ll typically file:

Schedule C (Profit or Loss from Business)
Schedule SE (Self-Employment Tax)
Form 1040 (Individual Tax Return)

You’ll pay:

Income tax on your net business profits
Self-employment tax (15.3%) to cover Social Security and Medicare

Key Tax Tips for Solopreneurs

1. Separate Business and Personal Finances

One of the most common mistakes solopreneurs make is mixing business and personal expenses. Not only does this make filing taxes harder, but it can also raise red flags with the IRS.

How to stay organized:

Open a separate business checking account
Use a dedicated business credit card
Use bookkeeping software like QuickBooks, Wave, or FreshBooks

2. Track Every Business Expense

You can significantly reduce your taxable income by deducting legitimate business expenses. But you need to document them properly.

Common deductions include:

Office supplies
Internet and phone (business portion)
Advertising and marketing
Software subscriptions
Business travel and meals
Home office (if you qualify)

Pro Tip: Save every receipt and use a digital tool to categorize and store them throughout the year.

3. Understand the Home Office Deduction

If you work from home, you may be eligible for the home office deduction—one of the most valuable for solopreneurs.

Requirements:

The space must be used exclusively and regularly for business.
It must be your principal place of business.

You can deduct a portion of:

Rent or mortgage interest
Utilities
Internet
Insurance
Property taxes

Use either the simplified method ($5 per square foot, up to 300 sq ft) or the actual expense method based on your home office’s percentage of your home.

4. Pay Estimated Taxes Quarterly

Since taxes aren’t withheld from your earnings like a regular employee, the IRS expects you to pay your taxes quarterly.

Estimated tax deadlines:

April 15
June 15
September 15
January 15 (of the following year)

Missing payments can result in penalties and interest. Use Form 1040-ES to calculate what you owe or ask a tax pro for help.

5. Save for Self-Employment Tax

Solopreneurs pay self-employment tax in addition to income tax. This covers Social Security and Medicare contributions that an employer would typically split with you.

Rate: 15.3% on net earnings

12.4% for Social Security
2.9% for Medicare
Additional 0.9% for Medicare applies if income exceeds $200,000 (single) or $250,000 (married)

Tip: Set aside 25–30% of your income for taxes to avoid surprises.

6. Maximize Retirement Contributions

You may not have access to a company-sponsored 401(k), but as a solopreneur, you still have powerful retirement savings options—many of which come with tax benefits.

Popular retirement plans:

SEP IRA: Contribute up to 25% of net earnings (up to $69,000 in 2024)
Solo 401(k): Contribute as both employer and employee (up to $69,000 or $76,500 if over 50)
Traditional IRA or Roth IRA: Great for lower contribution limits

Bonus: Contributions to SEP IRAs and traditional IRAs reduce your taxable income.

7. Deduct Health Insurance Premiums

If you pay for your own health insurance, those premiums may be fully deductible on your individual tax return (as an “above-the-line” deduction).

To qualify:

You must not be eligible for coverage through a spouse’s plan
Your business must have a net profit

You can also deduct dental and long-term care insurance for yourself and your family.

8. Keep Accurate Mileage Records

If you drive for business purposes—whether to meet clients, attend networking events, or make deliveries—you can deduct either:

Standard mileage (67 cents per mile in 2024)
Actual expenses (gas, repairs, maintenance, depreciation)

Use a mileage tracking app like MileIQ or Everlance to record trips automatically.

9. Consider Hiring a Tax Professional

Taxes for solopreneurs can be complex. A good accountant or tax advisor can:

Identify deductions you might miss
Help you estimate quarterly taxes
Advise on retirement and health savings options
Keep you compliant with the IRS

The investment in expert advice often pays for itself in tax savings and peace of mind.

10. Keep Records for At Least 3 Years

The IRS generally has three years to audit your tax return, so you should keep:

Income statements (invoices, 1099s)
Receipts and logs for deductions
Bank and credit card statements
Tax returns and supporting documents

For property or depreciation, keep records for at least 7 years.

Bonus: Solopreneur Tax Checklist

Here’s a quick checklist to help you stay on track:

✅ Separate business and personal accounts

✅ Track all expenses and income

✅ Deduct eligible home office and business use of car

✅ File quarterly estimated taxes

✅ Set aside money for taxes

✅ Max out retirement contributions

✅ Deduct your health insurance

✅ Work with a tax pro if needed

✅ Keep all records and receipts

✅ File Schedule C and Schedule SE with Form 1040

Final Thoughts: Empower Your Business Through Smart Tax Strategy

As a solopreneur, you wear all the hats—including that of chief financial officer. But with the right systems and strategies in place, you can simplify your tax process, stay compliant, and avoid overpaying.

Understanding your deductions, planning for quarterly taxes, and investing in tax-advantaged savings tools will set you up for long-term success. Whether you’re just starting your one-person business or scaling to new heights, smart tax planning is your best financial ally.

Would you like a downloadable solopreneur tax checklist or a template for tracking business expenses?

Tax Tips for Solopreneurs: A Guide to Filing as a One-Person Business