DIY taxes for independent business owners [checklist included]

Filing your taxes as an independent business owner doesn’t have to be a struggle. Use our DIY tax filing checklist to stay organized during tax season.

When you’re an independent business owner, tax time often comes more than once a year—it comes four times a year. If you’ve always wondered if you could handle it by yourself, this post is for you.

If you’re a single-owner LLC or sole proprietor, doing your own self-employment taxes is actually much simpler than you might expect. You don’t have to worry about a corporate tax return or any W-2s for employees (assuming that any assistants or freelancers that you hire are paid as independent contractors).

Not only will you save a couple of bucks on an accountant, but more importantly, doing your own bookkeeping and filing your own taxes helps you feel more in control of your business. It will give you a much better understanding of how business income taxes work and how your business is doing on a micro and macro level.

The exception: If your business reaches a level where you no longer have time for administrative work, there’s nothing wrong with outsourcing tasks like bookkeeping or tax filing. If you do decide to hire an accountant or bookkeeper, make sure they specialize in your field, are easy to communicate with, and will be able to send you the information and reports you need at a moment’s notice.

Jump to:

• Why business structure matters for taxes
• How to prepare for your small business taxes
• Gathering tax forms and important numbers
• Filing taxes online, by mail, or through a tax preparer
• FAQs on DIY taxes for business owners

Why business structure matters for taxes

Before we dive into your tax steps, let’s talk about why your business structure matters when it comes to taxes. If you’ve been in business for a while, feel free to skip this step. 

For someone just getting started with an independent business, you may not realize the impact business structure can have on your taxes in the long run. 

Most Independent business owners end up running a sole proprietorship since it’s the easiest to establish. You don’t need to file any documents or paperwork for your business, so it’s the structure that individual business owners default to. 

However, with a sole proprietorship, you file taxes as yourself, meaning you only file personal taxes. As a sole proprietor, your tax liability may be higher even if you don’t generate a lot of income through your business—it all depends on your personal household tax bracket. 

On the other hand, a single-member LLC lets you separate your personal and business taxes. You can protect your personal assets from liability, and you’ll be taxed at a corporate tax rate rather than your personal tax bracket. With sole proprietorships and single-member LLCs, you’re still entitled to the same tax deductibility, including travel, meals, equipment, and more.

How to prepare for your small business taxes

I recommend using a bookkeeping program or accounting software to track and categorize your income and expenses. For instance, with HoneyBook you can sync your account seamlessly with Quickbooks and track all your revenue information, including profit, loss, and expenses.  

Once your HoneyBook account is synced, the HoneyBook will automatically send all your business transactions to Quickbooks. Be sure to periodically check that your transactions are categorized correctly. These categories will be important when you’re filling out the “Business Expenses” section on the Schedule C portion of your tax return.

Independent businesses are required to pay quarterly taxes as they earn income, similar to the way in a W2 role your employer pays the government on your behalf throughout the year.

Make sure you mark tax day in your yearly calendar and begin preparing as soon as possible. While you’re required to report and pay your estimated taxes quarterly your actual taxes are due on or soon after April 15, depending on if April 15 falls on a weekend. Depending on your earnings and expenses you, may receive a refund or owe. Tax season typically begins in late January or February, during which you can file at any time until the due date. 

Gathering tax forms and important numbers

Before you can file your taxes, you’ll need to get organized with all the tax forms and numbers that you’ll need. As soon as you can start in the new year (preparing for the tax year prior), use the following checklist to gather your documents and financial reports. Depending on your business structure and work, you may not need all these documents and forms, but it’s a good rule of thumb to have the full list on hand. 

Business tax forms and numbers

☐  Your personal SSN and business EIN. If you’re a sole proprietorship you may only have an SSN.

☐  All 1099-NECs you’ve received. These will come from any non-salary/non-employee freelance work you did that exceeded $600. The employers will ask for your EIN/SSN and mailing address.

• You’ll be receiving these throughout the month of January—collect them in a folder until you’re ready to file your taxes. If they don’t send you one, that’s their mistake, not yours! Reach out to the payer first to remind them to send you a 1099. If you still don’t receive a 1099 by February, call the IRS.

☐  General income. This refers to all other income that you did not report in the 1099-NEC section.

☐  Transportation Expenses:

• Total miles driven in the tax year—both business and personal
• Miles driven for business (you can use an app like QuickBooks)
• Tolls paid during business driving
• Public transportation expenses (train tickets, subway, etc.)
• Parking fees (parking meters, parking garages, etc.)

☐  All 1099-NEC forms that you’ve issued. These are for any non-salary/non-employee freelancers who you paid at least $600 during the year. 

If you haven’t sent these yet, you’ll need to know their full company name (if applicable), EIN or SSN, and mailing address. You can collect all of this by sending them a W9 to fill out when you hire them. You’ll need to fill out a 1099-NEC form for each worker and mail a copy to the IRS and the recipient by January 31st. Programs like Quickbooks often create these for you.

☐  Any form 1099-MISC that you’ve issued. These are for miscellaneous payments over $6,000 for non-employees, such as attorneys frees, or any awards or prizes you may have issued as part of your work. 

☐  The cost of any (non-medical) insurance for your business. This includes liability insurance, equipment insurance, etc.

☐  Advertising expenses. These include digital ads on Facebook and Instagram, brochures, business cards, web hosting/blog expenses, logo design, etc.

☐  Office deductions such as equipment expenses, stamps, flash drives, software subscriptions, etc.

☐  Supplies such as boxes, packaging, printer paper, ink, pens, post-its, planner, etc.

☐  Other expenses. These could include PayPal/bank/ATM fees, courses, workshops, client gifts, etc.

☐  Home office expenses. You can only deduct these if you use part of your home solely for business, such as an office, desk, or studio. Common areas like your kitchen, bathroom, hallways, etc., do not count.

• Square footage of the whole home
• Square footage of the business-only area of the home
• Percentage of time you conduct business inside vs. out of the home
• Expenses relevant to the whole home—mortgage interest, property taxes, condo insurance, utilities, etc.

☐  If you have a SEP IRA set up for your business, it’ll let you know the maximum amount you can contribute to the account. The more you contribute, the more your taxes will go down (by roughly 15%).

Personal tax forms and numbers

☐  Any 1099-INTs you’ve received—these come from banks, brokerages, etc.

☐  Any 1099-DIVs you’ve received—these come from investments, retirement accounts, etc.

Banks may mail or email these to you, or post them on your account under “Documents”, Tax Documents”, “E-Documents”, etc.

☐  Any additional (personal, not under your business) 1099-NECs you’ve received for miscellaneous freelance/subcontractor work. These will be associated with your personal SSN, not your business EIN.

☐  1099-K, if you’ve received one for third-party network transactions.

☐  1099-G, if you’ve received unemployment or local income tax refunds, etc.

☐  Property tax information. If you entered this info under the “Home office” section, it’ll carry over the info and give you the proper deduction for the non-business portion of your home.

☐  Any charitable donations. You’ll need the name of the 501(c)(3) organization, the dollar value of the donation, and a donation receipt.

☐  Any 1098-E or 1098-Ts. If you’ve paid any money towards tuition, student loans, etc.

☐  Any medical expenses

☐  Estimated taxes. Each quarter, you’ll file a Form 1040-ES and submit your estimated taxes. To do this, just take last year’s federal tax due and divide by 4, then pay these equal amounts by the quarterly due dates throughout the year. You can file online at sites like pay1040.com, etc. If you are concerned about this process, be sure to speak with an accounting professional.

Enter the quantities you paid and the dates submitted. Don’t include any online credit card fees you might have paid for filing/submitting.

☐  Retirement/Investments such as a Roth IRA. If you’re financially able to, you should consider contributing the maximum—it isn’t taxed when you take out the funds when you retire!

☐  Any moving expenses, accountant fees (or the price of the TurboTax software), etc.

Filing taxes online, by mail, or through a tax preparer

Use software such as HoneyBook to keep good records of your self-employment income and expenses to make your DIY taxes easier. With your records, you can file your federal return using one of several methods. 

Filing taxes for independent business owners

You can file your taxes by printing the forms, filling them out, and mailing them to the Internal Revenue Service (IRS), or you can complete and submit the forms online. Otherwise, you can use tax software, which will use questionnaires to guide you through the forms and submit them when completed. Alternatively, you can pay a tax preparer or accountant to handle your taxes for you, including filing the forms and submitting your tax payments.

Filing taxes online

Electronic filing is one of the easiest ways to do your taxes. There are a variety of tax software programs available, though it’s important to pay attention to software costs. 

• IRS fillable forms for any income level
• IRS Free File’s guided tax software if your adjusted gross income is $79,000 or less
• Tax software such as TurboTax Business Online or TaxAct for small businesses

Filing by mail

Filing by mail entails printing out your forms, such as Form 1040; all of the relevant schedules, such as Schedule C (Profits From a Business) and Form 8829 (Business Use of Your Home); and any other required forms. Look at the form instructions for the IRS mailing address and mail all of your forms by the deadline.

Filing with a tax preparer

You may want to have a professional tax preparer handle your taxes, especially if you have any complex tax situations. By working with tax experts, you can take much of the guesswork out of your taxes. Plus, these professionals are trained to avoid entry errors, why it can be easy to have human error get in the way if you’re doing your own taxes. 

However, when working with them, it’s still important to make sure you’re providing them with all of your accurate income, asset, and expense information. Your choices include:

• Enrolled agents who have credentials with the IRS
• Certified Public Accountants (CPAs)
• Tax attorneys
• Tax preparation organizations such as H&R Block

FAQs on DIY taxes for business owners

When do I need to file my taxes in 2024?

The deadline for filing and paying taxes in 2024 is Monday, April 15.

Can I file my taxes for free?

You can file your taxes for free at the IRS.gov website as long as you meet the eligibility requirements, including the limits on your taxable income. If using an IRS tax preparation partner, you may be charged for filing a state tax return.

Should I use the standard deduction or itemized deductions?

The IRS lets you deduct eligible expenses to lower your taxable income, thus lowering your tax liability. You can itemize these business deductions, which include expenses such as mortgage interest, state taxes, and charitable contributions, to name a few. If you don’t itemize deductions, you can take the standard deduction.

Choose the method that will result in the maximum tax savings. If you add your itemized deductions and the total is less than the standard deduction, then use the standard deduction. Itemizing your deductions could lead to larger tax savings, however, if your total is larger than the standard deduction.

When can I expect my federal tax return?

A federal tax return is the form you file with the IRS. It’s your responsibility to obtain this return and file it, along with any tax payments you owe. If you’re expecting a federal tax refund, you can use the agency’s Where’s My Refund? tool to check its status.

That’s it! Not so hard, right?

Once you’ve gone through the entire checklist and have everything you need, you just need to file and make any tax payments necessary. You can file your taxes through online software like TurboTax and H&R Block. 

Disclaimer: The advice featured in this blog post was sourced from our community members for sharing general information and knowledge. For specific financial and legal advice, please consult an authorized professional.