Choose the Right Business Entity
Your entity structure (Sole Prop, LLC, S-Corp, C-Corp) has a massive impact on your tax liability. An S-Corp election, for example, can save self-employed individuals $5,000–$10,000+ per year in self-employment taxes once the business earns enough. Talk to a tax professional before year-end.
Track Every Business Expense
You can deduct legitimate business expenses from your taxable income. Common deductions include home office, vehicle use, business meals (50%), health insurance premiums, software, professional services, and equipment. Use accounting software (QuickBooks, FreshBooks) to track these automatically.
Maximize Retirement Plan Contributions
Contributing to a SEP-IRA, Solo 401(k), or SIMPLE IRA reduces your taxable income dollar-for-dollar. A SEP-IRA allows contributions of up to 25% of compensation (or $69,000 in 2025), making it one of the most powerful tax reduction tools for self-employed individuals.
Use Section 179 and Bonus Depreciation
Instead of depreciating business equipment over many years, Section 179 allows you to deduct the full purchase price of qualifying equipment in the year of purchase. In 2025, the limit is $1.22 million. Bonus depreciation continues at 60% and covers new and used assets.
Pay Quarterly Estimated Taxes
If your business is profitable, the IRS expects quarterly tax payments (due in April, June, September, and January). Missing these can result in underpayment penalties. Work with your tax advisor to calculate the right amounts based on projected income.
Hire a Tax Professional — It Pays for Itself
Small business tax law is complex and changes every year. A qualified tax professional typically saves businesses 3–5x their fee in identified deductions and avoided penalties. TGIfactoring's tax team serves small businesses across all industries and all 50 states.
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