Solopreneurs & Hustlers: 3 Reasons You Should Be Paying Someone to Do Your Taxes!

Key Takeaways

Self-Employment Taxes are complex! As a solopreneur, or hustler responsible for figuring them out, you’re likely facing a double tax burden. A qualified tax professional exists specifically to know what you don’t, and that investment could save you far more than it costs.
The right tax expert is worth seeking out! Not all tax preparers are created equal, especially for the self-employed. Ask the right questions, lean on fellow business owners for referrals, and walk into tax season prepared and supported, rather than overwhelmed.

How Did Taxes Go?

First off, this is never tax advice! So curious though…how did filing your taxes go this year?!

You may have noticed you got more of a refund than usual. This is because the One Big Beautiful Bill Act (spoiler–it’s not) changed our tax-filing rules a bit. The national average refund amounts are up over 11% more than last year. Some of the reasons for this is the new tax breaks on overtime and tip income, and also benefits to seniors on social security. If you or your employer did not update your withholdings, you likely overpaid and are seeing some of that money come back.

Not sure how to optimize your refund? Should you bump up your emergency fund, or pay down debt? Maybe invest some of it? Think through these options. Which makes the most sense for you?

If you ended up owing the IRS and you’re a solopreneur and responsible for managing your own taxes, this post is for you! Owing the IRS is an issue if you owed more than $1K. You may be required to pay Estimated Quarterly Taxes. An awesome hack here is to increase your withholdings at your W-2 job (if you have one) which means that employer will take on the burden of managing your withholdings for you, and will set aside the money all year long–super helpful!

If you do not have a W-2 job, it’s on you to set aside your own money for taxes. You can either do this by sending some to the IRS (as possibly required above) or budget it just like you would another business expense. Ideally, you pay yourself, consistently and automatically, and then you leave some in your business checking account that is meant for business expenses and taxes. I can help you figure this out! You can pay yourself and meet the goals of your business, smoothly and easily.

And finally, if you didn’t file by the April 15 deadline, you will need to file an extension. Be aware that filing an extension just extends the time that you have to file (usually another 6 months) but if you owe the IRS, the money is still due now. Here’s a refresh on those penalties if you fail to do this: Failure to File is an additional 5% of what you would have owed, per month, capped at 25% and is more costly than Failure to Pay, which is 0.5% of what you owe, per month, capped at 25%. However irritating or value-misaligned, don’t mess with the IRS.

If You Have Self-employment Income and You’re Still Doing Your Own Taxes (?!)

One: You’re likely getting double-taxed on your income (depends on your business entity type but most solopreneurs are subject to self employment tax). You will be hit with a 15% self-employment tax on top of your regular income tax. This means you could very well being taxed at 25-35%+! We’ve talked before about the various ways to lower your taxable income via things you can control like contributing to taxable accounts.

Two: It’s a lot more complicated to lower your taxable self-employment income. You likely need a professional to know ALL the ways you are eligible to do this.

Three: It is not your job to know all the ways your are eligible; but it is somebody’s job. With all of the changes to the tax code every year, you want to find that somebody. When seeking someone to do your taxes, don’t simply assume the person at the mega-chain knows what they’re talking about. Consider asking the following questions before you have any person/company take on your tax filings: are you their typical client, what are the rates you will be charged for your specific filings, what are the deadlines to get them the info, what is the process of getting them the info and what can you expect to be responsible for on your end are just a few of the considerations you’ll want clarified.

Know another business owner who does something similar to you who somehow doesn’t seem hair-pulling-crazy at tax time? Ask them for a referral!

How would it feel to not only be prepared for taxes (I can help with that!) but get an awesome referral for someone who might be able to help you file them? (I’ve got one of those for you too!)

FAQ’s

Do I really need to pay quarterly estimated taxes to the IRS as a solopreneur?

If you expect to owe more than $1,000 in taxes, the IRS generally requires you to pay estimated taxes quarterly. Skipping this can result in more penalties. A tax professional can help you figure out exactly what you owe and when. You can do this!

What can I actually deduct as a self-employed person?

This basic list is a good start, but a tax-preparing expert who is familiar with working with your type of income will touch on each deduction for which you may be eligible, whether you were aware of it or not!