Tax Services for the Self-Employed and Freelancers

That single fact drives almost everything that goes wrong for self-employed people at tax time. An employee has income tax and payroll tax taken out before they ever see the money. A freelancer, contractor or gig worker receives the gross amount, and the entire obligation — income tax, plus self-employment tax on top of it — arrives later as a bill.

Self-employment tax is the part that catches people out. It covers both halves of Social Security and Medicare, the employee half and the employer half, because when you work for yourself you are both. It applies to net business profit and it applies before the standard deduction touches anything. People who have always been employees routinely budget for their income tax bracket and are then surprised by a liability substantially larger than they planned for.

This is not a reason to avoid self-employment. It is a reason to know the number during the year rather than discovering it in April.

• Schedule C preparation — business income and expenses reported correctly
• Self-employment tax calculated, including the deduction available against it
• Quarterly estimated payments set from real projections rather than last year’s figure
• Deduction review: vehicle and mileage, home office, equipment, supplies, insurance, retirement contributions
• Bookkeeping, where the records are not currently good enough to support the return
• Entity advice — whether an LLC or S-Corp election is justified yet, and honestly when it is not
• Federal and South Carolina returns prepared together

The question we are asked most is whether to form an LLC or elect S-Corp treatment. The honest answer is that it depends on profit, and that below a certain level the answer is no.

An LLC provides liability separation but does not by itself change how a single-owner business is taxed — a single-member LLC still files on Schedule C by default. The tax question is the S-Corp election, which can reduce self-employment tax on the portion of profit taken as distribution rather than salary. It also requires running payroll, paying yourself a defensible reasonable salary, and filing a separate business return.

Those obligations cost money and time. Below the point where the saving exceeds them, electing is a net loss. Above it, the saving can be substantial. That threshold is worth checking annually rather than assumed once and forgotten.