Are you lying to yourself about a solopreneur tax strategy?

Every day, millions of self-employed workers all across America convince themselves they don’t need a tax strategy.

That’s a shame because they lose the opportunity to keep more of their hard-earned income and solidify their solopreneur lifestyle.

Today’s blog post will debunk some of the most common tax strategy myths solopreneurs tell themselves.

Let’s go!

Myth #1: “I don’t make enough money to need a tax strategy.”

This thought crosses the minds of many solopreneurs, especially those with side hustles.

But nothing could be further from the truth. You may not need a complex tax strategy, but you still need one.

Every solopreneur should know what deductions they qualify for, even if they work from home. More importantly, solopreneurs need to know how much money to set aside for taxes.

Setting aside 25 – 30% of your income will prepare you for the end-of-the-year tax bill. Failing to do so can create a cash crunch that can sink your business.

Myth #2: “Tax planning is too complex and time consuming for a solopreneur”

To be fair, this myth has some merit. Tax planning can be complex and time-consuming, regardless of the level of business.

Here’s the good news: Creating a tax strategy as a solopreneur can be the easiest of all types of business. There are often fewer deductions, and solopreneurs don’t have access to complex tax strategies available to larger corporations.

However, it still isn’t easy because most solopreneurs may not have enough income to justify hiring a tax professional. But there are great resources (like this blog) and other sites like Investopedia that can help solopreneurs find ways to minimize their tax bills and maximize their income.

Myth #3: “I can handle my taxes on my own without professional help.”

Like Myth #2, this one has an element of truth because many solopreneurs do indeed handle their own taxes.

But as your business grows, you’ll have more opportunities to take advantage of tax strategies that will let you keep more of your income.

Here’s an example.

Pat Flynn, the founder of the Smart Passive Income podcast and blog, started by creating an online course for architects.

One thing led to another, and soon, he was generating significant income while missing out on some tax advantages.

So, he worked with a tax advisor who suggested he form an S-Corporation to take advantage of tax savings on distributions versus salary. The move allowed Flynn to save on self-employment taxes and grow a team to help expand his offerings.

Would that have happened without help? Maybe. Would it have been more difficult? Most definitely.

The Bottom Line

Never consider yourself “just a solopreneur.” Business is business, no matter what size, and you should consider tax advantages at every turn.

It’s a critical aspect of financial management that can help you take your business to the next level. So, take some time to review some of the ideas you’ve heard about solopreneurship and see if you can’t flip the script on some of them.

You’ll be glad you did!