When You Can’t Afford a CPA

How to Do Taxes for Small Business

This guide covers what self-funded entrepreneurs need to know to manage taxes confidently, from setting up smart systems and understanding what you owe to filing the proper forms and avoiding expensive mistakes. Here’s how to do taxes for a small business when you’re flying solo: no fluff, no filler, just what you need to keep your books in check and the IRS off your back. Whether freelancing, consulting, or running a full-time business from your kitchen table, these tips will keep you legit and financially sane.

How Much Does a Small Business Pay in Taxes? 
Know What You Owe

According to the IRS, the current self-employment tax rate is 15.3%, or 12.4% for Social Security and 2.9% for Medicare. If you net more than $400 in self-employment income, you’re also required to file. So, how much does a small business pay in taxes overall? That depends on your profit, state, and entity type. But here’s a rough baseline:

• 15.3% self-employment tax on net earnings over $400

• Federal income tax ranging from 10% to 37%, depending on your bracket

• State income tax, ranging from 0% (e.g., Texas, Florida) to over 13% (hello, California)

When you add it up, you’re looking at 25%–40% of your income going to taxes if you don’t plan carefully. Note that this is completely separate from sales tax that may need to be collected and remitted to a state or states, depending on what product or service you sell as well as where and how you conduct business.

You Don’t Need a CPA for Small Businesses to Get Organized, Just a System

Before considering filing, you need a real system, not “a pile of receipts in a shoebox.” Whether you sell digital art, run a food truck, or consult out of your garage, disorganization is a tax liability.

Start with this bare-minimum DIY toolkit:

• Separate your business and personal accounts. Commingling funds is one of the easiest ways to trigger audits and lose track of expenses.

• Use bookkeeping software like Wave, QuickBooks, or FreshBooks. Even the free versions can automate invoicing, expense tracking, and basic reports.

• Log every transaction weekly. Don’t let weeks of purchases stack up.

• Keep digital copies of receipts. Apps like Expensify or even your phone’s camera work fine.

• Back up everything. Make sure everything is on the cloud, a hard drive, or ideally both.

Staying organized is half the battle. You’ll thank yourself when April rolls around and you’re not reconstructing the past year from memory and coffee-stained invoices.

Choose the Right Business Structure (It Affects Your Taxes)

If you’re still running as a sole proprietor by default, take a moment to consider your options. Your entity structure significantly impacts how much you pay and how complicated your tax filing gets.

Here’s a quick cheat sheet:

• Sole proprietorship—simplest, but subject to full self-employment tax on all profits

• Single-member limited liability company (LLC)—treated like a sole proprietorship by default, but can opt to be taxed as an SCorp

• SCorporation—lets you split income into salary (subject to payroll tax) and distributions, saving on self-employment tax

• Partnership—works for multi-member businesses but requires additional IRS filings

• C-Corporation—taxed separately from its owners, which may reduce personal liability but adds corporate tax obligations

You don’t need a CPA for small business to make this call; just research or use services like Bizee to help you form or convert your structure quickly.

Know Your Write-Offs (But Don’t Get Cute)

If you’re self-funded, deductions are your best friend. They shrink your taxable income and keep cash in your pocket. That said, not everything qualifies, and aggressive guesses can trigger red flags.

These common write-offs are safe bets for most entrepreneurs:

• Home office deduction—if you have a dedicated space used exclusively for business

• Startup costs—up to $5,000 in the first year (IRS Publication 583 outlines the rules)

• Business-related mileage—67 cents per mile for 2024, if properly documented, increasing to 70 cents for 2025

• Software and subscriptions—project tools, hosting, CRM software

• Professional services—legal fees, consultants, contractors

• Marketing expenses—including your website, design, ads, and business cards

Stick to what’s reasonable. Writing off your entire apartment “because you sometimes answer emails on the couch” won’t fly with the IRS.

Pay Estimated Quarterly Taxes—Or Pay the Price Later

Most entrepreneurs forget this part, and it comes back to bite them. If you expect to owe at least $1,000 in taxes for the year, the IRS requires you to pay quarterly estimated taxes using Form 1040-ES.

The deadlines are:

• April 15

• June 15

• September 15

• January 15 of the following year

If you fail to pay enough throughout the year, you could face penalties, even if you pay everything by the April deadline. To estimate your payments, divide last year’s tax bill by four. Or use a free tax calculator and your year-to-date income to get close.

Don’t File Without These Forms

DIY taxes don’t mean skipping paperwork. Even if you’re not a numbers person, the IRS is, and they expect precision.

Key forms to keep on your radar:

• Schedule C (Form 1040)—reports business profit or loss

• Schedule SE (Form 1040)—calculates self-employment tax

• Form 8829—if claiming the home office deduction

• Form 1099-NEC—if you paid freelancers or contractors $600 or more

• Form 1040-ES—for quarterly tax payments

Get familiar with these forms. They’re the core of filing without professional help, and accurately filling them out prevents mistakes that can lead to audits. If you are conducting business as a partnership, C corp, or S corp, this list may grow to include Forms 1065, 1120, or 1120-S.

Final Thoughts: You’ve Got This

You’re not alone in this. Thousands of business owners are in your shoes, and plenty of support exists without the price tag of a CPA. Just remember that knowing how to do taxes for small business isn’t just about following rules; it’s about taking ownership of your business from top to bottom. Start small. Stay organized. Ask for help when you hit a wall. Keep building. Your hustle deserves to thrive, not get swallowed up by tax confusion.

Resources:

Internal Revenue Service, Self-Employed Individuals Tax Center, link.

Disclaimer

Bizee and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction.