Your first year freelancing: a tax checklist

Going out on your own? Do these few things from day one and your first tax season will be boring — in the best way.

Updated June 2026

The day-one checklist

Open a separate business bank account. One account for business income and expenses makes bookkeeping, deductions, and an audit defense almost effortless.
Set aside 25–30% of every payment. Move it to a dedicated tax savings account the moment a client pays. Treat it as already spent.
Track income and expenses from the first dollar. You can't deduct what you didn't record. Capture receipts as you go, not in April.
Learn your deductions. Home office, mileage, software, phone, supplies, and more all lower your taxable income — see our Schedule C deductions guide.
Plan for quarterly estimated taxes. Four payments a year keep you current and penalty-free — see our quarterly taxes guide.

Set up once, benefit all year

Consider an EIN. A free federal Employer Identification Number lets you give clients a business ID instead of your SSN. (You can stay a sole proprietor; no entity change needed.)
Open a retirement account. A SEP-IRA or Solo 401(k) lets you deduct contributions and shelter profit — one of the biggest tax savers available to the self-employed.
Deduct your health insurance.If you buy your own and aren't eligible for an employer plan, premiums are usually deductible as an adjustment to income.

The whole checklist comes down to one habit: separate the money and set aside the tax portion the instant you're paid. Everything else is bookkeeping. Taxottic does the bookkeeping and the forecast for you — connect a bank and it tracks income, flags deductions, and tells you what to set aside and when to pay.

At year end

Your profit and expenses flow onto Schedule C, self-employment tax onto Schedule SE, and the totals onto your 1040. If you kept clean records all year, this is a quick assembly — and a great moment to hand a tidy export to a CPA for anything complex.

Frequently asked

What taxes do freelancers pay?

Two: federal (and usually state) income tax on your profit, and self-employment tax of 15.3% that covers Social Security and Medicare. Because no employer withholds for you, you pay both through quarterly estimated payments during the year and reconcile on your annual return (Schedule C plus Schedule SE).

When do I start paying quarterly taxes as a new freelancer?

As soon as you expect to owe $1,000 or more for the year after any withholding and credits. Estimated payments are due roughly April 15, June 15, September 15, and January 15 of the next year. Pay starting with the quarter in which you begin earning; you don't wait until next April.

What records should a freelancer keep?

Every invoice and payment received, every business expense with its receipt, a mileage log for business driving, and your home office square footage. A separate business bank account makes this almost automatic. Keep records for at least three years; the cleaner they are, the more deductions you can defend.

This guide is general information, not tax, legal, or accounting advice, and isn't a substitute for a licensed CPA or tax attorney. Tax rules change and depend on your situation; figures here are illustrative. Verify specifics against current IRS guidance or with your preparer.