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Figuring out how to file your self-employment taxes can feel intimidating and time-consuming, especially with the ever-changing tax laws that can confuse even an experienced filer. \nHowever, this process doesn't have to be a headache. As the 2023 deadline quickly approaches, preparing in advance can help you avoid costly penalties and fees. That way, you can enter tax season feeling confident and stress-free.\nKeep reading to learn how to prep, calculate, pay, and file your self-employment taxes in 2023. \nWhat is self-employment tax?\nOne of the first major shocks of working for yourself is learning that you’re now responsible for additional taxes. In short, the self-employment tax is something that all self-employed individuals must pay in addition to the income tax.  The Internal Revenue Service (IRS) uses this tax to fund the Social Security and Medicare programs. If it helps, you can think of it as investing in your own retirement since those programs largely support retirees. \nThe good news is that you don’t have to pay this tax until you earn more than $400 in self-employed net income. After that, you’ll have to put aside a percentage of your earnings to ensure you can afford to pay what you owe when the time comes. \nThis process differs slightly from filing taxes with a regular job because employers pay half their employees' Medicare and Social Security taxes while self-employed workers pay the entire thing. And unlike with a regular job, there’s no employer to take these taxes out automatically, so you have to be responsible. \nAlso, remember that the self-employment tax is not the same as income tax—which you’ll also have to pay.\nWhat is the self-employment tax rate in 2023?\nThe official self-employment tax rate for 2023 is 15.3%. To break that down, 12.4% goes toward Social Security, and 2.9% funds Medicare.\nThere’s also a cut-off for paying the Social Security portion based on your overall income from net earnings, wages, and tips. Keep in mind that the cutoff increased 8.2% to $160,200 for the 2023 tax season.\nOn the other hand, Medicare taxes never cut off. If you are a single filer who earns more than $200,000 from self-employment, you might even have to apply a 0.9% additional Medicare tax. For joint files, the income limit is $250,000.\nWho pays self-employment taxes?\nSelf-employment taxes are the responsibility of all self-employed individuals. These rules apply regardless of age or whether you are on Medicare or receive Social Security benefits. You'll likely have to pay if you earned more than $400 from a self-owned business. \nHere are some specific examples of who pays self-employment taxes:\nGig workers like rideshare and delivery drivers\n\nFreelancers and independent contractors\n\nAnyone earning passive income from:\nBeing a partner in a business\nBook/digital product sales\nMusic sales\nProduct sales\nOnline marketplaces (Etsy)\nSole proprietors or anyone \nneeding an LLC\n\nReal estate investors \nAnyone earning more than $108.28 a year from church employment\nNote that if you also have a full-time job, you’ll only apply the self-employment tax to your self-employment income. Also, in-home caregivers for disabled and elderly individuals \ndo not pay self-employment taxes\n.\n\nHow to file self-employment taxes step by step\nFiling your self-employment taxes can be a daunting task, but with the correct information and a few helpful tips, you can make the process much smoother. Below, we'll walk you through the steps of filing your self-employment taxes step by step. These tips and tricks will help you easily and confidently navigate the filing process.\nStep 1: Gather your documents and relevant info\nFor a stress-free filing experience, you’ll want to have all the necessary information and documents ready to go before you do anything else. \nFirst, you’ll have to provide identification in the form of either your Social Security number or your Individual Taxpayer Identification Number (ITIN). If you pay people to work for your business—even if they’re contractors—you will need an Employer Identification Number (EIN). Otherwise, you can use your social security number. \nThe next document you need is the 1099 form. If you don’t know, a 1099 form is for reporting income that doesn’t fit traditional W-2 reporting, such as freelance work, rentals, royalties, and independent contractor payments. \nYou can also use it to report non-employee compensation to contractors and other service providers of more than $600. If you did contract work for a company during the tax year, they should send you a 1099 form before tax time.\nTip:\n Companies will likely request that you fill out a W-9 form while establishing the service contract. The purpose of that document is to collect your tax-relevant information so that the company can accurately fill out your 1099 form.\nAdditionally, you should find all ledgers or bookkeeping tools you used to record income and expenses. You’ll want to keep your expenses organized throughout the year, so finding \nproof of income\n is super easy when tax season rolls around. \nStep 2: Total up your earnings\nOnce you’ve gathered all the necessary information, it’s time to calculate your earnings. The formula for this step is:\n[Net earnings = Gross self-employment income - Business expenses]\nTo avoid mistakes, you can make these calculations using \nSchedule C (form 1040)\n if you’re filing as a sole proprietor or \nSchedule E (form 1040)\n to report passive or supplemental income.\n\nStep 3: Total up any possible tax deductions\nAs a self-employed individual, the IRS allows you to deduct certain \nbusiness expenses\n from your taxes. This can help reduce your overall tax burden and save on the extra costs of self-employment. Here’s a quick overview the deductibles you could be eligible for:\nHome office:\n Expenses involved in running your business from home.\nEducation:\n Funds you spend to gain expertise towards your business.\n“Above-the-line” deduction:\n Half of your self-employment tax is deductible from your income tax.\nQualified business income (QBI):\n Up to 20% of your net profit. \nPhone and internet costs:\n Expenses you incurred from using your phone or internet for business purposes.\nMemberships:\n Expenses related to joining professional organizations in your industry.\nAdvertising/Marketing:\n Expenses involved in marketing your business.\nStartup costs:\n The costs of getting your business up and running.\nOffice supplies:\n Any funds you spend on necessary items for your office.\nCredit card and loan interest:\n Interest you gained on credit accounts from business purchases.\nBusiness travel and meals:\n Expenses involved in traveling for work.\nCar:\n Expenses related to using your personal vehicle for business.\nBusiness insurance premiums:\n Funds you pay towards insurance if you have employees.\nHealth insurance:\n Expenses related to securing health insurance.\n\nRetirement plan\n contributions:\n Expenses involved in securing a retirement plan.\nKeep in mind that each of these \nself-employed tax deductions\n has rules and requirements you need to follow.\nIt’s also possible to avoid the self-employment tax altogether if you file your LLC as an S Corp. You’ll only have to pay on your personal salary, as opposed to all your business profits. This solution may not work in all situations, so ensure you're clear on the pros and cons of \nincorporating your business\n.\nStep 4: Figure out how much you have to pay\nTo calculate the self-employment tax, multiply your net income by the self-employment tax rate. If your net earnings from self-employment from all businesses are $400 or more, use \nSchedule SE (Form 1040)\n to calculate your tax. \nOnce you have your answer, add it to \nSchedule 2 of Form 1040, part II\n.\nTip:\n You only have to apply the self-employment tax to 92.35 percent of your net earnings, which could save you thousands of dollars in tax payments.\nHere’s how that works. When using Schedule SE, you’ll chop 7.65 percent (or half of the self-employment tax rate) off your self-employment income \nbefore you apply\n the self-employment tax. For example: If you made $55,000 in self-employment income, you would only pay self-employment taxes on $50,792.50. That keeps almost $5,000 in your pocket.\nThe formula for this calculation is:\n[Net income x .9235 = Taxable income]\n\nStep 5: Make quarterly payments\nWhile you only report and file self-employment taxes once yearly during tax season, aim to pay them throughout the year to avoid penalties or interest charges. You should also track all the tax payments you make during the year for accurate reporting.\nYou’re eligible for estimated quarterly payments if:\nYou owe a minimum of $1,000 in federal income taxes this year, even after tax credits.\nYour withholding and refundable credits don’t cover at least 90% of your tax liability for this year or 100% of last year’s liability.\nTo pay your taxes quarterly, you should first estimate your annual earnings and calculate the amount of tax you owe using the formula from earlier. Divide that total into four payments and send those to the IRS every quarter. Remember to attach your payment to the appropriate payment voucher on \nForm 1040-ES\n.\nDon’t forget that there are deadlines. These are estimated quarterly payment due dates for 2023:\nApril 18, 2023\nJune 15, 2023\nSeptember 15, 2023\nJanuary 15, 2024\nAs for payment methods, you can opt for cash or money order through the U.S. mail or \npay online\n or through the IRS2Go mobile app.\nStep 6: Filing your self-employment tax\nThe final step to filing your self-employment tax is when all the previous steps come together. In this portion, you’ll finalize the information and forms you need to send to the IRS. \nFirst, use the results from your self-employment tax calculations to fill out \nForm 1040\n. Remember that you’ll need to provide your Social Security number or ITIN.\nAttach Schedule C (or E), which you filled out earlier. Next, report the tax calculations from your Schedule SE form on part II of the \n1040 Schedule 2\n, and attach that to your 1040.\nWhen you’re ready to send these forms off, you have a few options: The free IRS e-filing service, a third-party e-filing company, or you can send the physical forms to the \nfiling office in your state\n.\n\nNow that you can confidently file your self-employment taxes, it’s important to stay organized and ready for tax season. Track and streamline all transactions for your self-employed business and keep them separate from your personal finances with the \nSolo app\n.\nSources:  \nIRS\n\n

How to file your self-employment taxes in 2023

When you \nwork for yourself\n, it may seem easier to combine your personal and business finances; you may think about dipping into your personal savings to help fund your new business venture or using your personal debit card here and there to make business transactions. While this may seem easier up front, filing taxes and managing your finances can go much smoother if you learn how to separate business and personal expenses from the start.\nFiling business taxes requires much more documentation for things like business expense write-offs, financial reports, and payroll information, so it’s important to distinguish a clear separation between the two. In this guide, we’ll teach you how to separate business and personal finances so you can stay organized and prepared for tax season. \nNOTE: We have made a reasonable effort to provide accurate information, but we are not tax attorneys or accountants. This article is for informational purposes only, and Solo does not accept any liability for the use or misuse of this information. Consult a tax professional familiar with your state's laws.\nBusiness taxes vs. personal taxes\nSimilar to personal taxes, business owners get taxed on the income they make from their business. The biggest differences between personal and business taxes are the forms you need to fill out, write-offs you can deduct, filing requirements and deadlines you must meet when filing.\nSo, what exactly are business taxes and personal taxes and what are we paying for? \nExamples of business tax:\n \nIncome tax \nEmployment tax\nSelf-employment tax \nEstimated tax\nExcise tax \nExamples of personal tax:\n \nPersonal income tax \nPayroll tax \nProperty tax \nCapital gains tax \nEstate tax \nDo you file business taxes separate from personal taxes?\n\nDetermining whether or not you can file your business and personal taxes together or separately comes down to your business structure. \nMany business structures, aside from corporations, are pass-through entities, which means business owners will file their business taxes on their personal tax returns. If you’re a pass-through entity, you’ll file an informational federal tax return but won’t be responsible for paying corporate income tax.\nEach structure has different \nfiling requirements outlined by the IRS\n.\nPartnership\nPartnerships are pass-through entities, meaning each owner must report business income and losses on their personal tax returns using \nForm 1040\n. Partnerships must first file \nForm 1065\n to report the business's financial information. From there, each owner will receive a \nSchedule K-1\n that they will use to prepare their personal tax return. \nSole proprietorship\nAs a sole proprietor, your business structure is a pass-through entity, so you cannot file business and personal taxes separately. You will use \nSchedule C, Form 1040\n to file business income and expenses on your personal tax return. \nS corporation\nS corporations are also pass-through entities, so each individual owner will pay their portion of business taxes on their personal tax return using \nForm 1120-S\n.\nC corporation\nYou can file business and personal taxes separately as a C corporation since the IRS sees it as a separate entity from its shareholders. To report your business expenses as a C corporation you must file \nForm 1120\n.\n\nLLC\n (Limited Liability Company)\nLLCs are also pass-through entities, so the owner will report business incomes and losses on their personal tax returns. However, if your LLC has multiple members, you can elect to file as a corporation to keep your business and personal taxes separate using Form 1120. \nHow to separate business and personal expenses in 7 simple steps\n\nKeeping your business and personal finances separate starts with the formation of your business. Here are seven simple steps you can take to ensure you keep your business and personal expenses separate to make the filing process during tax season a breeze. \n1. Register your business\nDetermining your business structure and registering your business is the first and most important step in maintaining separation between your business and personal finances. As mentioned above, each type of business structure—\nsole proprietorship\n, \ncorporation\n, \npartnership\n, and \nLLC\n—has different tax filing requirements. As a small business owner, you’ll likely classify a pass-through entity, so you’ll file business income and expenses on your personal income tax return.\nHowever, \nincorporating your small business\n may allow you to keep your personal and business finances separate, as it’ll be a separate legal entity. If you want to keep your business tax return and personal tax return separate, it’s best to register your business as a C corporation or LLC and elect to file as a corporation. \n2. Apply for an EIN\nAn employer identification number (EIN) also known as a Federal Tax Identification Number, is a nine-digit number issued by the IRS to identify your business for tax purposes. Think of it as a social security number for your business. Business entities operating as a corporation, LLC, or partnership must obtain an EIN. \nIf you operate as a sole proprietor, you aren’t required to obtain an EIN and can use your social security number when filing your taxes. However, you can still get one. If you plan to open a business bank account, it may be smart to get an EIN, as some banks require this when opening a business account. \nTo obtain an EIN, you can: \nApply online:\n Complete the \nonline application\n and receive your EIN immediately. \nApply by fax:\n Complete \nForm SS-4\n, fax it to the \nappropriate fax number\n, and receive your EIN within four business days. \nApply by mail:\n Complete \nForm SS-4\n, mail it to the \nappropriate address\n, and receive your EIN within four weeks. \n3. Open a business bank account\nNext, you’ll want to open a dedicated \nbusiness bank account\n. This is the easiest way to ensure you keep your business and personal finances separate. It’s best to start with a business checking account, so you can use it to pay bills and make day-to-day business transactions. \nEven if you are a sole proprietor and have to file your personal and business taxes together, a business bank account will allow you to track your business’ income and expenses separately. This will make it easier to distinguish your business income from your personal income during tax time. \nA business bank account can help build your business line of credit, gives you easier access to \nsmall business loans\n, and helps protect your personal information, since you have to use an EIN as opposed to your social security number. \nTo open a business checking account, you’ll need: \nPersonal identification, like an ID or passport\nEmployer identification number (EIN) \nBusiness details, like your business name and address \nAny supporting documents, like your business license \nMinimum opening deposit if the bank requires one \n4. Get a business cash card\nNext, you’ll want a dedicated business card to make any business transactions. This is just another way to keep your personal and business expenses separate. \nA \nbusiness debit card\n is used to spend the funds you have available in your business checking account with no interest charges, credit limit, or other requirements. You can also quickly withdraw cash from your account if you need to. \nA \nbusiness credit card\n is used to make business transactions that you can pay back later. It can also help you establish your business credit, increasing your chances of getting a business loan. However, there are more requirements, like a credit limit and interest. \nSolo’s business cash card makes it easy to spend money on your business while helping you keep track of expenses and payments all within the app. \n5. Keep track of your expenses and keep receipts\n\nStaying organized by \nkeeping track of your business expenses\n will make filing your taxes so much easier. When tax season rolls around, you won’t have to worry about digging up receipts, invoices, and bank statements at the last minute. \nBusiness expenses are any costs related to running your business. Here are a few tips for successfully tracking your expenses.  \nAutomate with accounting software\nManually tracking your business expenses can become tedious and time-consuming, especially as your business grows. Accounting software makes it easy to keep track of and organize your expenses, saving you a ton of time you’d spend manually inputting information. \nThe great thing about accounting software is that it also has other built-in tools that can give insight into how your business is doing financially, like reporting tools. \nSave and digitize your receipts\nIt’s important to keep receipts for every business transaction you make, so you have a proper log of your business purchases. Come tax time, you’ll need to reference these expenses when determining your tax deductions. \nYou can keep paper receipts and invoices in a folder, but digitizing them is a safe and easy way to ensure they’re all in the same place. The accounting software you choose will likely have a feature that allows you to scan the receipts using your phone. \nMonitor business use of personal items\nThere may be some instances where you use personal items for business use, like using your car, home office, or personal phone. In this case, make sure you’re properly tracking when you’re using them for business purposes. For example, tracking your mileage when using your car and keeping your gas receipt. \n6. Pay yourself\nYou want to avoid using your business funds for personal needs, so paying yourself a salary is necessary to maintain a clear boundary between your personal and business finances. \nJust as you’d get a paycheck from an employer, pay yourself a salary twice a month (or on a schedule that works for you). Transfer the funds from your business account to your personal account, or set up an automatic transfer on the same day each month, so you don’t forget. \nYou may be wondering, how much should I pay myself? Here are a few things to consider: \nWhat is your monthly net income?\n This will help you understand how much profit your business generated after you’ve subtracted your business expenses. \nDo you have enough money set aside for taxes?\n A good rule of thumb is to set aside 30% of your net income to go toward paying your business taxes. \nHow much do you need to cover personal expenses?\n This will give you a realistic estimate of how much money you’ll need to pay yourself to cover your bills and other personal expenses. \nWhat is a reasonable monthly salary that won’t put my business finances at risk?\n Based on your monthly net income, tax savings, and personal expenses, determine how much you can comfortably afford to pay yourself. \n7. Prep for tax season year-round\nThe final step in keeping your business and personal finances separate is filing your taxes, which should be easy if you’ve followed the steps above. Preparing for tax season all year will set you up for success come time to file. This means setting aside a portion of your earnings for taxes. \nWhen running your own business, you may be required to file taxes quarterly and annually. \nQuarterly taxes:\n On a quarterly basis, the IRS requires small business owners to pay \nestimated tax\n if they expect to owe $1,000 or more in taxes or $500 or more for corporations. \nForm 1040-ES\n includes a worksheet that can help you determine your estimated tax. \nAnnual taxes:\n You will still need to file your annual federal income tax return at the end of the year. If you didn’t pay enough in your quarterly estimated tax payments, you will have to pay the remaining balance after you file your tax return. If you paid too much, you could receive a refund. \nPaying quarterly taxes may seem like a drag, but you might find it easier to pay smaller installments than having to fork over a bigger lump sum at the end of the year. Make sure you’re staying ahead of filing deadlines for quarterly taxes to avoid penalization. \nHow to separate business and personal taxes\nLearning how to separate your business from your personal expenses helps make tax filing easy. Now that we understand how to keep business expenses separate, here’s how to separate business and personal taxes so you’re prepared to file.\n1. Organize and gather what you need to file your taxes separately\nWhen you work for yourself, you’ll need to gather a few more documents and additional information than you would need when filing your personal tax return. If you’ve stayed on top of your business finances throughout the year, accessing this information should be no problem. \nBusiness tax documents needed\nHere are some things you may need to gather when filing business taxes: \nSocial security number or EIN \nLast years tax return \nInvoices and receipts \nBills \nSales records \nBank statements \nCredit card statements \nRecord of deductible expenses you plan to claim \n\nProof of income\n\nBalance sheet \nIncome statement \nCash flow statement\nBusiness loan records, including accrued interest and payments \nThe appropriate tax forms for your business structure \nPayroll information (if you have employees)\nPersonal tax documents you need\nWhen filing your personal income tax return, here are some documents you may want to gather ahead of time: \nSocial security number \nLast years tax return \nIncome statements (W-2’s, 1099 forms) \nDependent information \nMortgage interest statement \nStudent loan interest statement \nCharitable contributions \nIRA contributions \nEducation expenses\nChildcare expenses \nMedical expenses \nHealth insurance \n2. Know the common tax deductions\nTax deductions, or tax write-offs, are business expenses that you can subtract from your taxable income to lower the amount you owe when you file your tax return. Careful planning and organization of your business finances can help you accurately calculate your yearly tax write-offs. \nCommon business tax deductions\nHere are some common \ntax deductions\n you should keep in mind before you file your business tax return: \nDeduction\nWhat’s eligible?\nPercentage deductible\nHome office expenses\nUtilities, rent or mortgage, phone bills, internet bills, etc.\nAmount based on how much you used for business\nAdvertising and marketing expenses\nBusiness cards, social media ads, flyers, etc.\n100%\nSelf-employment tax\nSocial security and Medicare taxes\n50% of what you pay in self-employment taxes\nBusiness use of car\nMileage, gas, etc.\n100%\nBusiness interest\nCredit card interest, investment interest, property interest, etc.\n30% of your adjusted taxable income\nTravel expenses\nCost of plane tickets, rental car, hotel, meals, etc.\n100%\nStartup costs\nSupplies, licensing or permits, insurance, advertising, etc.\nUp to $5,000\nEducational expenses\nBooks, tuition, supplies, etc.\n100%\nInventory expenses\nCost of products, labor costs, storage costs, etc.\n\nInsurance\nHealth insurance, business continuation insurance, property insurance, etc.\n100%\nOffice supplies and expenses\nFurniture, printers, computers, etc.\n100%\nBusiness bad debt\nBusiness loan guarantees, loans to suppliers, etc.\n100% (for fully worthless debt)\nCommon personal tax deductions\nWhen it comes to personal taxes, there aren’t as many write-offs to deduct from your taxable income. Generally, people take the standard deduction—an automated deduction taken from your taxable income. The standard deduction varies depending on your filing status, whether you’re 65 or older, and whether another person claims you as a dependent. \nHowever, if you paid property taxes or student loan interest, for example, those qualify as deductions and are considered eligible for write-offs. In this case, you can choose to itemize your deductions as opposed to taking the standard deduction. \nHere are some common personal tax deductions you should consider ahead of filing: \nStudent loan interest\nHealth care premiums \nRetirement contributions \nMortgage interest \nProperty taxes\nCharitable contributions\nNote: Ensure you only report tax deductions once\nTo make sure you don’t accidentally report your personal tax deductions on your business tax return (and vice versa) you’ll want to make sure you have all of the proper documentation separated, so you only file the write-offs once. This is why staying organized during the year is important—it makes tax filing easier and limits small mistakes.\nThough pass-through entities file their business income and losses on their personal tax returns, you’ll still want to keep business and personal write-off documentation separate to ensure you’re filing an accurate tax return. \n3. Stay on top of filing deadlines and other tax dates\nThough some business structures have the same filing deadline as your personal tax return, some have an earlier deadline. You’ll also want to make a note of filing deadlines for estimated taxes, as well as deadlines for filing an extension. If you owe taxes and miss your filing date, you may receive a penalty and have to pay. \nBusiness tax dates and deadlines\nHere are the tax filing deadlines and dates you need to know when filing your business taxes.  \n\nWhat’s due?\nDate\nWho does it apply to?\n2022 4th quarter estimated tax payment\nJanuary 17, 2023\nAll businesses\nDeadline to send out W-2 forms to employees\nJanuary 31, 2023\nAll businesses\nDeadline to send 1099 forms\nJanuary 31, 2023\nAll businesses\nDeadline to file yearly tax returns\nMarch 15, 2023\nPartnerships, S corporations, and multi-member LLCs\nDeadline to file an extension\nMarch 15, 2023\nPartnerships, S corporations, and multi-member LLCs\n2023 1st quarter estimated tax payment\nApril 18, 2023\nAll businesses\nDeadline to file yearly tax returns\nApril 18, 2023\nSole proprietorships, C corporations, and single-member LLCs\nDeadline to file an extension\nApril 18, 2023\nSole proprietorships, C corporations, and single-member LLCs\n2023 2nd quarter estimated tax payment\nJune 15, 2023\nAll businesses\n2023 3rd quarter estimated tax payment\nSeptember 15, 2023\nAll businesses\nDeadline to file returns with an extension\nSeptember 15, 2023\nPartnerships, S corporations, and multi-member LLCs\nDeadline to file returns with an extension\nOctober 16, 2023\nSole proprietorships, C corporations, and single-member LLCs\n2023 4th quarter estimated tax payment\nJanuary 15, 2024\nAll businesses\nPersonal tax dates and deadlines\nUnless you file an extension for your personal tax return, there’s only one important date you need to remember when filing your personal taxes—\nApril 18th, 2023\n. If the filing date lands on a weekend or holiday, you’ll have until midnight the following business day to file. \nIf you’d like to file an extension, you’ll need to submit \nForm 4868\n by April 18th, 2023, and you will have until \nOctober 16th, 2023\n to file your personal tax return. \nKeep personal and business expenses separate with Solo\nFiling taxes when you’re self-employed can be tricky, but staying organized and properly separating business and personal expenses can take some stress off your plate when tax season rolls around. \nSolo can make it easier for you to pay expenses and track your spending. Make purchases for your business from your Solo account balance with the Solo cash card. Your customers can also pay you using multiple payment methods, like Apple Pay, Google Pay, and other traditional payment methods. An all-in-one place for freelancers, sole proprietors, contractors, and small business owners to pay, get paid, and track their spending. \nLearn more at \nSolo.co\n. 

Guide to separating business and personal finances for a streamlined tax season

When you’re working with a \nfreelancer or contractor\n, it’s common for deliverables to change hands. Those deliverables likely amount to intellectual property (IP), meaning someone owns the rights to them. But the question is: Who exactly does own the rights?\nA freelancer IP agreement is designed to transfer ownership of intellectual property. Below, we’ll dig into the basics of intellectual property, how to protect your interests as an entrepreneur, and how to get started on an IP agreement with our free template.\nIMPORTANT NOTICE: Solo is not a law firm or licensed attorneys, nor do we claim to be. This blog does not provide legal advice and is for informational purposes only.  Before using any information or forms made available from this site, you should consult with an attorney to ensure that they are appropriate and adequate for your needs.  Solo does not claim that the forms made available on this site are complete or appropriate for use in all circumstance or jurisdictions and disclaims all responsibility for any outcomes from the use of any information provided on this site.\nIntellectual property agreement: Sample template\nNeed help crafting an IP agreement before your working relationship begins with a freelancer? Look no further than our free, editable intellectual property agreement template.\nClick below to get the template:\n\nDownload IP agreement template\n\nIf you’re not quite ready to dive into creating your own intellectual property agreement, continue reading to review IP itself and explore the purpose behind IP agreements.\nOverview: What is IP?\n\nIP is an acronym for intellectual property, which is an intangible or indefinite asset that a person creates. Intellectual property can come in many forms, but most commonly it’s protected by one of three identifying marks: copyrights, patents, and trademarks. You can license or transfer each of these IP rights with an intellectual property agreement.\nWhen you create something like a blog post, an illustration, or even a slogan for your first marketing campaign, you have the rights to that intellectual property—that is, unless you’re working under an IP agreement that transfers the intellectual property rights to someone else.\nWhat is an IP agreement?\nAn IP agreement, or intellectual property agreement, is a legally binding document that defines the ownership of intellectual property rights between two or more parties. This agreement can be between companies, employees and their employer, or even an employer and a freelancer they work with.\nIP agreements might also be referred to as IP transfer agreements or IP assignment agreements if they involve transferring the ownership rights of the IP.\n\nRegardless of the name, the IP agreement’s purpose is to guard the ownership rights of the intellectual property while also outlining any guidelines for other parties that will work with the IP, such as a freelancer—in this case, it’s a freelancer IP agreement.\nFreelancer IP agreement: Why you need one\nIf you’re planning to hire a freelancer to create any kind of work on behalf of your business, it’s a good idea to ensure your contract contains a freelancer IP agreement. When a freelancer creates work for a business, any assets are automatically the intellectual property of the freelancer unless a freelancer IP agreement says otherwise.\n\nWhat does that mean for you? If you don’t use an IP agreement with a freelancer, you might:\nLose\n the rights to assets created on behalf of your business, like logos, blog copy, or more\nDevalue\n your work or lose a unique edge if the freelancer ever decides to reuse the work for other purposes\nDamage\n your working relationship with the freelancer, potentially harming your \nbusiness’s reputation\n long term\nEven if you agree to allow the freelancer to retain ownership rights and you simply license their work, it can be a good idea to put the scope of that relationship in writing via an IP agreement. That way, you’re more likely to have protection in the event of a legal dispute over your right to use the intellectual property.\nTwo types of IP agreements: Pros vs. cons\nNot every freelancer IP agreement is created equal. In some instances, it could make sense for you to own the intellectual property rights to a work. Other times it might make more sense for you to simply license the IP from a freelancer without owning them outright.\nEach type of freelancer IP agreement has benefits and drawbacks for small business owners. Before drafting an agreement, it could help to talk things over with the freelancer you’re working with to decide what works beneficially for the both of you.\nBelow, take a look at a few pros and cons of exclusive and nonexclusive agreements:\n1. Exclusive agreement\nWhen you enter into an exclusive IP agreement, you own exclusive rights to the IP. Typically in this agreement, the freelancer sells those rights directly to you. No other party can own or use the IP, even at the discretion of the freelancer.\nPro:\n You have the option to sue for infringement of your intellectual property rights since you’re the sole owner.\nCon:\n Taking exclusive ownership of all IP rights involved in a project might be seen as a step too far for freelancers.\nExclusive IP rights must be written up in an agreement, so if you plan to take this approach, an intellectual property agreement is a must.\n2. Nonexclusive agreement\nIn a nonexclusive IP agreement, multiple people can own rights to the IP, each holding a nonexclusive license to use it. Stock photography is a common example of a nonexclusive IP agreement.\nPro:\n Since you’re not acquiring the IP outright, licensing the work in this way can be less expensive.\nCon:\n You don’t own the rights to the work, so others may be able to use it beyond your control.\nNonexclusive IP rights may not necessarily need to be put in writing like exclusive rights, but it’s still a good idea to put an IP agreement in place that clearly defines what you own and how you can use it.\nWhat to include in a freelancer IP agreement: Three considerations\nIf you’re thinking of working with a freelancer to develop creative work or an otherwise original creation, you should think about how you would like to use it and if you would prefer to own it.\nHere are three questions to answer when thinking about what to include in an intellectual property agreement:\n1. What specific IP is involved?\nYou should note exactly what is involved in the agreement in as much detail as possible to avoid confusion. It’s best for an IP agreement to also note what IP isn’t covered, such as any intellectual property that the freelancer previously created and already owns the rights to.\nDeclaring specifically what you are and are not claiming the rights to can help avoid questions about ownership when your working relationship with the freelancer comes to an end.\n2. How am I obtaining rights to the IP?\nIf you plan to obtain exclusive or nonexclusive rights, you should explain it in clear terms. Again, defining the terms of the agreement in as much detail as possible helps avoid the risk of confusion on either side of the agreement.\nYou must place exclusive rights in writing in the agreement or they cannot be enforced. If you and the freelancer are sharing ownership in some capacity with a form of nonexclusive rights, it’s a good idea to include those terms, too. That way, you have clear terms for the usage of your IP rights.\n3. What am I willing to compromise on?\nFreelancers create work that supports their livelihood, and they may ask for some concessions in the agreement. An agreement is always between at least two parties—you might want to talk with the freelancer and see how your thoughts about the project compare. \nFreelancing may be their \nside hustle\n, or it could be their fulltime gig, and you might build a great working relationship by allowing a freelancer to retain the rights to use your content in their portfolio or something else within limits.\nIP agreements can be good business sense\nNo matter the size of your business, an IP agreement’s purpose is to protect you and your interests. Even if you’re a \nsolopreneur\n that hires a freelancer for a one-off project, including an IP agreement in your contract can help clearly define who owns what when the project comes to a close.\nIf you decide to move forward with hiring a freelancer, Solo is the easy way to pay them and keep track of your spending. Learn more at \nSolo.co\n.

Why you need a freelancer intellectual property agreement + free template

44 business ideas for stay-at-home moms (or dads!)

A women-owned small business certification (WOSB) is a highly respected certification that offers female business owners several valuable benefits, including access to education and networking opportunities, getting an edge on earning federal or corporate contracts, and improving visibility in the marketplace. These certifications are a great way for women to take their business to the next level.  \nWhether you \nwork for yourself\n or you have a team, if your business is at least 51% owned and operated by women, you may be eligible for certification. \nLearn more about the different types of certifications, their requirements, and why having a women-owned business certification is beneficial. \nTypes of women-owned business certifications\n\nThere are two main types of women-owned business certifications that you can apply for, including the women-owned \nsmall business\n certification (WOSB) and the economically disadvantaged women-owned small business certification (EDWOSB). Each type serves a different purpose and has different requirements. \nWomen-owned small business (WOSB)   \nA woman-owned small business (WOSB) is a company that is \n51% owned by one or more women \nwho have U.S. citizenship.  \nTo become a certified women-owned small business (WOSB) and secure access to additional funding, you must adhere to the following:\nMust be a minimum of \n51% owned by one or more women \nwho has a U.S. citizenship\nMust be \nmanaged by women on a daily basis\n. Those who make long-term decisions for the company must also be women. \nMust have a \ndesignated woman as the highest officer position\n in the company during regular work hours on a full-time basis\nMust qualify as a small business per the \nSBA standards\n — this standard generally uses revenue and/or employee size as a measure \nEconomically disadvantaged women-owned small business (EDWOSB)\nAn economically disadvantaged women-owned small business (EDWOSB) is a company that is at least 51% owned by one or more women, are considered \neconomically disadvantaged,\n and has U.S. citizenship.\nTo receive an economically disadvantaged women-owned small business certification, your business must meet these requirements:\nMust have a fair market value of assets at \n$6 million or less\n (no exclusions) \nMust have a personal net worth that \ndoes not exceed $750,000\n (some exclusions apply) \nMust have an adjusted gross income average that \ndoes not exceed $350,000 \nover the course of three consecutive years\nHow to get certified as a woman-owned business & tips \n\nBecoming a certified women-owned business can be helpful in so many ways. Both the \nSmall Business Administration\n (SBA) and the \nWomen’s Business Enterprise National Council\n (WBENC) offer certification. Here’s how to get started becoming certified as a women-owned business and tips to help you streamline the process. \nAdditionally, use the checklist below to help ensure you have everything you need ahead of applying. \n\nhttps://res.cloudinary.com/solo-global/image/upload/cms/website/posts/pdfs/women-owned-business-certification_oqfdpu.pdf\n\n\n\nStep 1: Determine if you’re eligible \nBased on the qualifications above, you first need to determine if you’re eligible to apply. If your business meets the requirements and it’s the right fit for your needs, you’re ready to move forward and gather the necessary documentation and information. \nStep 2: Gather required paperwork and documentation \nYou must apply online to become certified. To ensure the application process goes smoothly, assemble all of the paperwork and documents you need ahead of time. Here’s a list of documents you’ll likely need to have: \nGeneral information:\n Business history, power of attorney that shows ownership, user agreements, business license(s), and more \nOwner eligibility information: \nEvidence of gender for the owner(s) and documents that provide proof of U.S. citizenship \nFinancial structure: \nFinancial statements and documents as well as federal income tax returns, \nproof of income\n, and more \nManagement and personnel information: \nDocuments that provide information regarding information about employees, payroll, W2 or 1099 forms, other agreement forms, and more \nGovernance information: \nDocuments related to your \nbusiness structure\n (i.e. sole proprietorships, corporations, partnerships, and LLCs) \nFor more specifics on the required documents, refer to the \nWBENC documentation\n information. \n  \nStep 3: Fill out the online application \nAfter you’ve gathered the necessary information and documents, you can move forward with the online application. You’ll apply either through self-certification or through a third-party certification process depending on your preference: \nSelf-certification option: \nApply for a WOSB or EDWOSB directly via the \nU.S. Small Business Administration (SBA)\n. Please note that you will need active registration in the \nSystem for Award Management\n if applying through the SBA  \nThird-party certification:\n You can apply for a WOSB or EDWOSB using an approved third-party site such as:  \n\nWomen's Business Enterprise National Council \n\n\nU.S. Women’s Chamber of Commerce\n\n\nNational Women’s Business Owners Corporation\n\nBe sure to review your application carefully and ensure that all of the information is correct and be prepared to pay a non-refundable processing fee.\nStep 4: Provide proof of certification \nTo be able to participate in the WOSB Federal Contracting Program, you must provide proof of certification to the SBA by signing up and uploading it through their \nwebsite\n. Once they approve your certification, you’ll receive a formal confirmation email from the SBA. \nStep 5: Promote your certification \nOnce you’re certified, promote your new certification to spread the word. You can do things like adding a mention on your social media or website to help market it. Also consider direct mail or email blasts to let people know and gain support from the community.  \nWomen-owned business certification benefits\n\nThere are many benefits to obtaining a women-owned business certification, such as access to tools and resources and business opportunities. Other benefits include: \nAccess to additional resources:\n A certificate can provide access to many opportunities, such as mentoring, tools, resources, education for executives, development programs, and more \nAdded support\n: Gain added support from other women business owners who are like-minded and passionate about the success and growth of women-owned businesses  \nIncreased eligibility for awards: \nA certificate can help your business become eligible for national and regional awards and recognition \n \nMore diversity:\n Supplier diversity and access to procurement executives at major entities and corporations who accept the WBENC certification is another benefit\nAdditional marketing avenues:\n With a certificate, you can broaden your range of marketing tools using the Women’s Business Enterprise Seal and Women-Owned Logo — these can help promote your business and expand your company’s visibility\nAbility to explore more business opportunities: \nWith a certificate, you can have additional access to explore both informal and formal business opportunities with other WBENC-certified companies \nWomen-owned business certification FAQs \nIf you’re still curious about what a women-owned business certification is all about, explore the frequently asked questions below for more information:  \nHow much does it cost to get a women-owned business certification? \nThe cost of applying and getting certified varies depending on the amount of revenue your business generates. This tiering system is split into five categories and is based on annual gross revenue that gets reported on federal taxes: \n$50 million and over: \n$1,250 \n$10 million < $50 million:\n $1,000 \n$5 million < $10 million:\n $750 \n$1 million < $5 million: \n$500 \nLess than $1 million:\n $350 \nHow long does it take to get a certification? \nIf you had a smooth application process and they didn’t need further information from you, then you can expect your WOSB or EDWOSB certification within 15 to 90 days from the moment they receive your application to receive your certificate. \nHow long does the certification last?\nThe WOSB is a three-year certification from the SBA. You must also complete an \nattestation\n annually. If you’re already certified through the WBENC, your recertification will be processed annually as part of this requirement. \nWhat if I don’t have all of the required documents?\nAccording to the \nWBENC\n, if you are missing a required document to apply for a certificate, you can submit a letter that states which documents don’t apply and the reason. \nIf it’s a required document that you don’t have yet but you can create, you should consider obtaining it.  \nAdditional women-owned business resources\nBelow are some additional resources to help you get more information on women-owned business certifications and programs that provide assistance:  \n\nAssociation of Women’s Business Centers (AWBC)\n\n\nCenter for Women & Enterprise (CWE) \n\n\nCode of federal regulations for WOSB and EDWOSB\n\n\nLadies Who Launch \n\n\nList of documents needed for certification\n \n\nMoms as Entrepreneurs (MAE) \n\n\nNational Association for Female Executives (NAFE)\n\n\nNational Association of Women Business Owners (NAWBO) \n\n\nNational Women’s Business Council (NWBC)\n\n\nSBA Office of Women’s Business Ownership \n\n\nSBA table of small business size standards\n\n\nSBA Women-Owned Small Business Federal Contracting \n\n\nSystem for Award Management registration\n\n \n\n\nThe U.S. Small Business Administration\n \n\nWomen Impacting Public Policy (WIPP)\n\nLevel up your business with a women-owned business certification \nEstablishing your business as an official women-owned one can open many doors or opportunities and provide great benefits, like access to support from like-minded companies and more networking opportunities. This guide and tips will be sure to help you obtain a women-owned business certification smoothly and level up your business. 

How to register for a women-owned business certification

Starting your own business can feel overwhelming, especially when it comes to costs and filing taxes. Luckily, there are tax break benefits you can take advantage of, including car, home, insurance, education, and retirement costs. \nIf you want to \nstart your own business\n or already work for yourself, here are 15\n \nself-employed tax deductions to take this year.  \nNOTE: We have made a reasonable effort to provide accurate information, but we are not tax attorneys or accountants. This article is for informational purposes only, and Solo does not accept any liability for the use or misuse of this information. Consult a tax professional familiar with your state's laws.\nWhat is the self-employment tax deduction? \n\nThe self-employment tax deduction is a deduction the IRS gives to self-employed workers to soften the heavy costs of starting your own business. This self-employment tax deduction provides great benefits for entrepreneurs who have sole proprietorships, partnerships, and limited liability companies (LLCs).\nThose who are self-employed can deduct their business-related expenses on \nSchedule C\n of Form 1040 during tax season. If you’re eligible, you can deduct up to 20% of your qualified \nbusiness income\n (QBI). \nNote: \nAs of 2022, the self-employment tax rate is 15.3% of net earnings, consisting of 2.9% Medicare tax and 12.4% Social Security tax.   \n15 Tax deductions for the self-employed \n\nMany self-employed individuals can take advantage of tax deductions, including writers who work from home, rideshare drivers, designers, photographers, consultants, and more. \nHere are 15 self-employed tax deductions you can file on your next tax return.\n1. Vehicle use  \nIf you use your personal car to make business-related trips, such as making deliveries or performing other services, you can deduct the mileage when tax season rolls around. When it comes to claiming vehicle use on your taxes, there are two options: \nStandard mileage: \nThis allows you to deduct the number of miles you used for business purposes. \nActual expense: \nThis option requires you to calculate how much it costs to operate and maintain your car for business use. \nWhat you need to know: \nYou can file tax deductions for vehicle wear and tear or mileage on your tax returns.  \n2. Home office \nRunning a business out of your home has its perks—including deductions on home office expenses. With this, you’re able to deduct the costs of: \nUtilities \nA portion of your rent or mortgage \nProperty taxes \nMaintenance \nYou can also deduct your home office supplies that you use in day-to-day operations. \nWhat you need to know: \nFirst, find out the percentage of the square footage in your home that you use for your business-related activities. That percentage of your rent or mortgage may be deductible according to the \nIRS\n. \n3. Business insurance \nIf you run your own business and have employees, you can consider deducting your business insurance premiums. This includes: \nEmployee accident insurance \nEmployee health insurance \nWhat you need to know: \nWhen deducting business insurance, you’re only able to claim the amount for the tax year it relates to. For example, if you paid $20,000 on Jan. 1 2022 for a business insurance policy that covers two years, you can only deduct $10,000 each of those two years. \n4. Advertising expenses \nBoosting your business’s or \nside hustle’s\n presence can carry a cost—especially when it comes to advertising efforts. You may be eligible for a deduction if you pay for any of the following: \nFacebook ads \nGoogle ads \nBillboards\nBusiness cards \nTV commercials \nFlyers \nWhat you need to know: \nSchedule C\n contains a line where you can report your advertising expenses.  \n5. Some memberships  \nSome memberships may be tax deductible, such as for a professional organization related to your industry of expertise. A professional organization can include: \n\nChambers of commerce\n\nBusiness leagues  \nMedical or bar associations\nReal estate boards \nTrade associations\nPublic service organizations \nWhat you need to know: \nThis does not apply to country club memberships. A legitimate membership does not provide entertainment or access to facilities that provide entertainment. \n6. Education development \nRunning or starting your own business takes expertise and knowledge, so continuing your education is important. You can deduct educational development from your self-employment taxes — this can be anything educational, including:  \nBooks \nSupplies \nSchool tuition \nClass costs \nLab fees\nTransportation to and from education-related locations \nWhat you need to know: \nAccording to \nPublication 970\n from the IRS, you can deduct these expenses only if they “maintain or improve skills needed in your present work.” \n7. Start-up costs \nCosts can add up when you \nstart your own business\n—but there may be an opportunity for you to deduct the expenses you made to get everything up and running. This self-employed tax deduction usually includes the costs of: \nGrand opening advertising \nWages and salaries for your employees\nConsulting fees \nBusiness-related travel \nWhat you need to know: \nAccording to \nPublication 535\n, if your organization’s start-up costs do not exceed $50,000, you may be able to deduct up to $5,000. \n8. Health insurance premiums  \nHealth insurance premiums may also be deducted from your tax returns. Self-employed workers can obtain health insurance by filling out a \nMarketplace application\n or qualifying for low-cost coverage through \nMedicaid and CHIP\n programs. \nIf you’re self-employed, you can usually deduct these as a business expense. To do so, you must show one year of a net business profit. \nWhat you need to know: \nThese deductions include dental, medical, and long-term care plans for you and your spouse, dependents, and kids under the age of 26.  \n9. Phone and internet bills \nPhone and internet bills are usually all part of the job—especially if you \nwork from home\n. As a self-employed worker, you can have your phone and internet bills deducted. \nWhat you need to know: \nMaintain a record of your internet and phone usage and only deduct the percentage that was used for business-related purposes.  \n10. Travel expenses \nIf your business operations require you to travel frequently, then you may be able to deduct those expenses. This business travel deduction covers accommodation and travel costs but does not include leisure or entertainment costs. Some of these expenses include: \nCost of plane or bus ticket\nCost of meals \nCost of hotels \nBe sure to keep accurate records and receipts of all business-related travel expenses to make reporting easier. \nWhat you need to know: \nThe \nIRS\n allows you to deduct 100% of all business-related travel and 50% of meals. \n11. Loan and credit card interest  \nKeep track of your business \ncredit card\n statements to receive potential tax deductions on interest that was gained from business-related purchases. Additionally, almost any interest you pay on a loan is tax deductible. \nWhat you need to know: \nA tax-deductible loan can include term loans, business lines of credit, short-term loans, and personal loans, but only if they're business-related. \n12. Retirement plan contributions \nIf you’re self-employed, you may be able to expense retirement plan contributions that you make to a qualified retirement plan, such as a 401(k). Even if you’re a small, one-person business, you can still set up your own 401(k).  \nWhat you need to know: \nDuring tax season, you’re able to make annual salary deferrals up to $20,500 as of 2022. \n13. Subscriptions and publications  \nThose business-related subscriptions and publications you’ve signed up for can also be tax deductible. The types of subscriptions you can deduct as a business expense include: \nTrade, medical, technical, or professional magazines or journals that are related to your business \nTool, software, and even business supply subscriptions like printer ink\nFees from hosting your business website \nWhat you need to know: \nAdd these deductions on Form 1040 Schedule C as “other expenses.” If you have a subscription that is prepaid for over a year, you can prorate the cost for each year to deduct that. \n14. Qualified business income  \nThe qualified business income (QBI) deduction is the net amount of qualified items of deduction, loss, income, and gain that are related to any business or trade. In general words, it’s your business’s net profit. This does not apply to any business income earned outside of the U.S. \nWhat you need to know: \nThe qualified business income (QBI) deduction allows those who are self-employed to deduct up to 20% of their QBI on taxes—this only applies if your combined business and personal income is below $164,900 for single filers or $329,800 for joint filers. \n15. Self-employment taxes  \nAdditionally, you can deduct self-employment taxes as a \nbusiness expense\n. Social Security and Medicare taxes are deducted from self-employment taxes. The self-employment tax rate is 2.9% for Medicare and 12.4% for Social Security—15.3% total of all net earnings.  \nWhat you need to know: \nWhen filing your income tax return, you can deduct half of your self-employment tax on \nForm 1040\n.  \nHow to calculate self-employment tax \nTo calculate your self-employment tax, you first need to figure out the net earnings that you made in self-employment for the year. This is usually \ngross income minus business expenses\n. \nAbout 92.35% of your net earnings may be subject to taxation—once you’ve figured out how much net earnings are subject to taxation, apply the 15.3% tax rate.\nSelf-employment tax deductions FAQ \nStill curious about self-employment tax deductions? Explore the frequently asked questions below.\nWhat is the 20% self-employment deduction? \nThe 20% self-employment tax deduction is placed on net business income. This tax deduction applies to sole proprietors, \nLLCs\n, partnerships, pass-through entities, and shareholders in S and C corporations. \nWhat deductions can I claim without receipts?\nIt’s difficult to keep track of all of your day-to-day receipts. With that being said, there are some deductions that you can claim without receipts. These deductions include: \nLoan interest\nMaintenance \nInsurance \nFuel \nRegistration \nCharitable donations \nMembership fees \nIt’s always safe to keep track the best you can and log your credit card statements to make things simpler when tax season approaches. \nIs car insurance a tax deduction?\nCar insurance is considered a self-employment tax deduction. Those who are self-employed can deduct car insurance from their taxes. When it comes to your business-related vehicle, there are a few other deductions you can add, including: \nGas and oil \nTires\nTolls and parking fees\nCar repairs \nGarage rent \nLease payments \nRegistration fees \nDepreciation \nReceive a tax break as a one-person business  \nConsider these self-employed tax deductions if you \nwork for yourself\n or are looking to get your new business off the ground—they can be especially helpful if you want to find ways to save some extra cash. Be sure to sign up for a separate \nbusiness credit card\n to make reporting your expenses simpler when tax season begins.  \nSolo makes it easy to pay, get paid, and track spending\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay, get paid, and keep track of your spending. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

33 articles found in “Business 101”

How to file your self-employment taxes in 2023

Guide to separating business and personal finances for a streamlined tax season

Why you need a freelancer intellectual property agreement + free template

44 business ideas for stay-at-home moms (or dads!)

How to register for a women-owned business certification

15 self-employed tax deductions and benefits

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