“Understanding Your Self-Employed Tax Responsibilities: What Every Sole Proprietor Needs to Know”

Financial Horizons: Insights for Building Wealth and Securing Your Legacy

By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

Self-employment offers freedom, flexibility, and the power to build something that’s entirely your own. But along with that freedom comes an important responsibility: filing your taxes correctly as a self-employed individual or sole proprietor.

If you're running your own business—whether full-time or on the side—understanding the tax requirements and taking advantage of available deductions can be the difference between financial growth and costly mistakes.

Why Self-Employed Tax Filing Is Different

Unlike traditional employees, self-employed individuals are responsible for managing their own taxes, including income tax and self-employment tax (which covers Social Security and Medicare). This means:

• No employer withholds taxes on your behalf.
• You may need to make quarterly estimated tax payments.
• You're eligible for specific deductions that employees cannot claim.

Key Tax Considerations for Sole Proprietors

✅ Schedule C Filing: Your business income and expenses are reported on Schedule C, which is filed with your personal 1040 tax return. Accurate recordkeeping is essential.

✅ Self-Employment Tax: You must pay both the employer and employee portions of Social Security and Medicare taxes—totaling 15.3%. However, half is deductible on your income tax return.

✅ Quarterly Estimated Payments: If you expect to owe $1,000 or more in taxes, you're required to make payments to the IRS four times a year. Missing these can lead to penalties and interest.

✅ Home Office Deduction: If you use part of your home exclusively for business, you may be able to deduct a portion of your rent, utilities, and more.

✅ Business Expenses: Office supplies, travel, advertising, and even a portion of your phone bill may qualify as deductible expenses. Keeping detailed receipts and records is crucial.

Smart Steps to Take Now

🔹 Separate Your Finances: Open a separate business bank account to keep personal and business expenses organized.

🔹 Use Accounting Software: Tools like QuickBooks, Wave, or FreshBooks help automate income/expense tracking and reduce human error.

🔹 Track Mileage: Business-related travel in your personal vehicle can be deducted using the IRS mileage rate—just keep a log!

🔹 Hire a Tax Professional: Working with an experienced advisor can help you identify deductions, stay compliant, and build a stronger financial foundation.

Ready to Get Clarity on Your Tax Filing as a Business Owner?

Don't wait for tax season stress. Start planning now. We can help you develop a strategy that maximizes your deductions and ensures IRS compliance—so you can focus on growing your business with confidence.

📅 Book your personalized tax strategy session today:
👉 Schedule Here

About the Author

Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in tax planning, business strategy, and financial education, Dr. Cardenas is passionate about helping entrepreneurs and small business owners protect their wealth and create lasting legacies.
🌐 Learn more at www.thecrgroupllc.com

📌 Disclosure: This article is for educational and informational purposes only and is not intended to serve as personalized legal or investment advice. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance strategies, including Indexed Universal Life (IUL) and annuity products, may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.

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