Top 7 Tax Mistakes Self-Employed People Make (and How to Fix Them)
Being your own boss is awesome — until tax season shows up like an unexpected guest with a calculator and attitude. Whether you're freelancing, running a side hustle, or managing your own business full-time, taxes hit differently when you’re self-employed.
Here are 7 common tax mistakes self-employed people make — and how to fix them before the IRS gets involved.
1. Not Setting Aside Money for Taxes
Let’s be real, when you get paid, it’s tempting to treat that money like it’s 100% yours. But Uncle Sam still wants his cut.
Fix: A good rule of thumb is to stash 25–30% of each payment into a separate savings account just for taxes. Yes, it’s annoying. But so is a surprise tax bill you can’t pay.
2. Missing Quarterly Estimated Payments
If you’re self-employed, you’re usually expected to pay taxes four times a year — not just in April. Miss those deadlines, and you could get hit with penalties.
Fix: My best recommendation, make an estimated payment the same day you get paid or take a distribution. You can set calendar reminders for monthly or quarterly due dates and pay what you can — even partial payments help.
3. Mixing Business and Personal Finances
I see this all the time.. Buying personal items with your business debit card or even business items with a personal card? Been there. But it makes tax time a total nightmare.
Fix: Open a separate bank account and credit card for your business. It keeps things clean, and if the IRS ever audits you, you’ll be glad you did.
4. Not Tracking Deductions Properly
From mileage and software to coffee with a client — deductions can save you a lot of money. But only if you track them.
Fix: Use an app (like MileIQ or Expensify), keep digital receipts, and jot down notes when you spend money on business stuff. You can’t deduct what you can’t prove.
5. Forgetting About Self-Employment Tax
You’re not just paying income tax — you also owe self-employment tax, which covers Social Security and Medicare. It’s around 15.3%.
Fix: Budget for it. It’s a shocker if you’re not prepared, but totally manageable if you plan ahead.
6. Filing Late (or Not at All)
Life happens. But skipping your taxes or filing late can lead to penalties, interest, and scary IRS letters.
Fix: File on time, even if you can’t pay in full. Extensions buy you more time to file, not more time to pay. Can’t deal with it? That’s what we’re here for.
7. Trying to DIY Everything (When You’re in Over Your Head)
TurboTax might be fine for a W-2. But if you’re running a business, have back taxes, or got a scary letter? You need backup.
Fix: Know when to call in help. Whether it’s organizing your books or dealing with the IRS, a tax pro can save you time, money, and stress — especially when things get messy.
Final Thoughts
Self-employment is freeing, but it comes with a tax curveball most people aren’t ready for. Avoiding these mistakes can save you money and headaches.
If you’re feeling overwhelmed — behind on filings, owe money, or just unsure where to start — reach out. We help self-employed people get things back on track without the judgment.