How Freelancers Can Prepare for Tax Season Without Stress

Publication Date

April 17, 2023

Summary

Taxes can feel overwhelming, even when you aren’t a freelancer. But as a self-employed writer, the better you understand your taxes (and the sooner you prepare), the easier life gets when April rolls around.

5 Tax Basics Every Freelance Writer Should Know

1. How Much Should I Set Aside for Taxes?

Every single time you get paid — whether it’s $50 or $5,000 — set aside 20–30% of that income for taxes.

Why? Because as a freelancer, you’re responsible for self-employment taxes (around 15.3% total: 12.4% Social Security + 2.9% Medicare) and your state taxes, which vary but often average around 15%.

You may not end up needing that whole amount, but you will be glad you saved it when tax season hits.

2. Sole Proprietor vs. LLC: What’s the Difference for Freelancers?

Sole Proprietor

A sole proprietorship is the default setup when you start freelancing — no extra paperwork required. You’re entitled to 100% of your profit but also responsible for 100% of the risk and debt.

Tip: Get an EIN (Employer Identification Number) — basically a Social Security number for your business — for free from the IRS. It adds a layer of protection and keeps your SSN private.

LLC (Limited Liability Company)

An LLC is a simple legal structure that gives you limited liability — meaning your personal assets (car, house, savings) are better protected if your business is sued or can’t pay debts.

Cost: Filing fees range from $40–$500, depending on your state.

Tax Note: A Sole Proprietorship and an LLC are taxed the same way — unless you elect to become an S-Corp.

S-Corp status allows you to pay yourself a salary and potentially lower your self-employment taxes. But it also comes with more admin: separate accounts, payroll, bookkeeping. If you go this route, keep business and personal finances 100% separate and talk to a CPA.

3. Do I Need to Pay Quarterly Taxes?

First year? Probably not. But after that, yes.

If you owe $1,000 or more per quarter, the IRS expects you to pay quarterly estimated taxes.

If you skip them, you’ll owe a small penalty — usually under $100 — but if you habitually underpay, those fees add up fast.

If you know you struggle to save, you can send $1,000/quarter straight to the IRS so you’re not tempted to spend it elsewhere.

4. What If I Can’t Pay My Taxes in Full?

Don’t panic — the IRS has payment plans.

Short-term plan: Pay in 90–180 days — no interest.
Long-term plan: Pay monthly — but you’ll owe interest.

Important: File on time anyway. Even if you can’t pay the full amount, you can pay any amount toward your total — no strict payment schedule required.

5. Should I Get an EIN?

Short answer? Yes.

An EIN (Employer Identification Number) is free to get from the IRS and only takes a few minutes.

Benefits:

Keeps your Social Security number private
Required if you ever hire W-2 employees, form an LLC, or open a solo 401(k)
Helps protect against identity theft
Needed for some business bank accounts or funding

Try This:

Taxes are due April 18th — don’t wait!

Here’s how to make tax season less terrible:

1. Block 2–3 hours on your calendar to get it done

2. Gather your paperwork:

Bookkeeping software/spreadsheets/notebooks
1099s
1095-A form (if you have Marketplace insurance)
EIN info
Banking info
Your tax prep software or CPA contact

3. Log in to TurboTax (or hire help — worth every penny)

4. File your taxes or set up a payment plan

5. Pour yourself a drink — you did it!

FAQ’s About Freelance Writer Taxes

Q: Do I really need to save 30% of every payment?

A: Yes — it’s safer than under-saving. You might get some back if you have business write-offs or lower income, but over-preparing = less stress later.

Q: What’s the benefit of an LLC if taxes are the same?

A: Protection. An LLC can shield your personal assets if someone sues you or you default on business debt.

Q: Can I switch from Sole Prop to LLC later?

A: Absolutely. Many freelancers start as Sole Props and file as LLCs once they grow or want more protection.

Q: Do I have to pay quarterly taxes forever?

A: Yes — if you consistently owe more than $1,000 per quarter, you’ll need to pay estimated taxes every year.

Q: Do I need an accountant?

A: Not required — but if taxes stress you out, a CPA is worth it. Even using a TurboTax expert can make tax season way easier.

Quick Disclaimer Again

This blog is not tax advice. Always check with a licensed tax professional for guidance on your unique situation.

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