Tax Strategies For Self-Employed Business Owners

Just as larger corporations do, self-employed business owners, freelancers, and gig workers need to engage in strategic tax planning to minimize liability and maximize savings.

Be Diligent

about Keeping Records Familiarize yourself with all available deductions, including home office expenses, vehicle mileage, and equipment costs. Maintain thorough records of your expenses throughout the year to substantiate your deductions when filing taxes.

Review Your Business Structure

Your business—whether you're a sole proprietor, an LLC, or an S corporation—can significantly affect your tax liability. Each structure has unique tax implications. Talk with your tax professional before the new year to ensure you're taking advantage of the most beneficial structure. For sole proprietors, for instance, forming an LLC may provide better liability protection and potentially lower self-employment taxes.

Contribute to a Retirement Plan

Contributing to small-business retirement plans, such as Solo 401(k)s, SEP IRAs, or personal IRAs, helps you invest for the future and may offer immediate tax advantages.

Pay Estimated Taxes

If you don't have tax withheld from your income, you'll need to make estimated tax payments to avoid penalties. Monitor your income and expenses throughout the year to determine how much to set aside for quarterly payments.

Stay on Top of Changes

Planning to buy tangible business assets— equipment, vehicles, software, or improvements to nonresidential real estate? Recent enhancements to bonus depreciation and Section 179 expensing allow you to write off costs in the first year to minimize taxes. Because expensing limits adjust annually for inflation, strategize whether to buy in 2026 or 2027.

If you receive or issue IRS Forms 1099-NEC or 1099-MISC for payments to nonemployees, the reporting threshold rises from $600 to $2,000 in 2026. This amount will adjust for inflation in future years. Reporters will have less work, while form recipients should plan to track and report small fees received.

Connect with your trusted advisor now to create a focused, forward-looking tax strategy that positions you for savings in 2027 and beyond. Act today to ensure you're prepared for upcoming changes and to maximize every opportunity.