For millions of sole proprietors across the US, tax season has turned from a mad dash once a year into a constant worry throughout the year. As the freelance economy, micro-entrepreneurship and the shady world of the creator economy keep growing, the IRS has seen a steady hike in people filing Schedule C forms. And according to some recent numbers from the IRS, it's clear that more Americans are ditching traditional jobs for the freedom of being their own boss.
But even with all this change, a lot of sole proprietors are still stuck on the same basic question: how on earth are you doing your taxes? The tools, the habits and the strategies are all over the shop, and the current market is making things even more complicated - rising interest rates, higher software costs and more scrutiny from the IRS are all pushing business owners to think twice about how they're doing things.
What Tools Should You Use?
The tools for doing taxes have changed, but the wild variety of approaches used by sole proprietors just keeps getting wider. Some swear by full service platforms like QuickBooks Self-Employed or TurboTax Self-Employed - these make it easy to keep track of expenses, mileage and those quarterly payment estimates. Others go for a mix of spreadsheet and tax software - day to day tracking in a spreadsheet, and then tax time is tax time. And then there's the 'organized chaos' crew - a folder of receipts, a few random notes on the phone and a huge freak out every March.
With inflation making software subscription prices go up and up and new AI-powered bookkeeping tools coming onto the market, many sole proprietors are rethinking just what they need. Some are switching to cheaper spreadsheet templates, others are upgrading to more automated systems just to avoid making mistakes that will get them a nasty letter from the IRS. The U.S. Small Business Administration is still telling everyone just how important it is to keep accurate records, especially now that the IRS is doing digital audits more often.
Do it Yourself or Get a CPA - When to Call in the Pros?
The big decision of whether to do your own taxes or get a pro to help is all about how complicated things get. A lot of sole proprietors start off doing their own thing because their income is simple. But as their business grows - more clients, subcontractors, equipment to depreciate, home office deductions to sort out - the risk of messing up is way higher.
CPAs say the most common moment people switch to getting pro advice is when they get that first nasty letter from the IRS or realizes they underpaid their quarterly taxes. Some make the switch when they get to the point where tax strategy is just as important as getting the thing done right. And in 2026 - with more and more people juggling income from all sorts of platforms (Etsy, Upwork, Shopify, Patreon) - the trend of people needing some proper support is only going to keep going.
Handling Quarterly Estimated Taxes the Right Way
Quarterly estimated taxes continue to be a huge headache for sole proprietors . Many new business owners are surprised to find out they have to pay taxes four times a year, not just in April. If you miss those payments you can end up with penalties, even if you do end up paying the full amount by the end of the year.
Some sole proprietors just set aside a fixed amount of every payment - usually 25 or 30 percent - into a separate tax savings account to make it easy on themselves. Others use software that does the calculation for them, taking into account how much they've earned so far. Some are even using high-interest savings accounts to stash their tax money, earning a bit back on the side before the payments are due.
But lots of people still struggle to stay on top of it. If your income is all over the place, or if you've got some unexpected expenses, it can be tough to figure out how much you need to put aside each quarter. As the IRS keeps updating its payment systems, more and more sole proprietors are turning to online payment plans and automated reminders to help them stay on track.
Mistakes People Often Make
Ask any old hand at running a business about their early tax mistakes and they'll probably tell you the same things: not keeping track of all your expenses throughout the year, mixing your personal and business money, neglecting to pay quarterly taxes, or thinking that a small income doesn't need to be reported. Lots of people also regret not getting a handle on their bookkeeping from day one.
Another common regret is not fully understanding the rules around deductibles. Sole proprietors often end up leaving money on the table by missing out on legitimate deductions like software subscriptions, professional development courses, home office expenses, and driving around for work. Then on the other hand there are those who overdo it and end up getting audited or getting the IRS knocking on their door. It can be a real learning curve, and if you get it wrong you can end up losing a lot of money.
In today's fast-changing tax environment where the rules are shifting all the time and there's more and more weird income coming in, sole proprietors are starting to get a lot more serious about building tax systems that work all year round rather than panicking at the last minute. Whether they're using software, a spreadsheet, or hiring a pro, they're all trying to do the same thing: stay on the right side of the law, stay on top of their finances, and stay profitable.
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