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A blog to help freelancers with taxes - Collective

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Sole Proprietor Guides

State-by-state guides for setting up and maintaining your business.
Browse our popular guides or search for your state below.

Blog

The Sole Proprietor’s Mid-Year Check-In: Is Your Setup Still Working for You?

Most people who start working for themselves don’t sit down and choose a business structure. They start taking…

Jun 11, 2026 · 6 min read
Business Formation

Sole Proprietorship vs LLC: What’s the difference?

No matter how much cash you earned this year, being self-employed can be a complicated business. You’re responsible…

Jul 8, 2020 · 8 min read
Business License

Business License California: What you Need to Know

If you do business in California, you might need a California business license, permit, or certificate to operate. …

Jul 20, 2018 · 10 min read

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First, tell us about your business

Net profit = Total revenue - total expenses

  1. Find total revenue. Add up all money your business earned from sales of goods or services during the year.
  2. Subtract your expenses. Deduct all business costs like supplies, rent, utilities, software, contractor payments, and loan interest.

An estimate is fine, you don't need exact figures.

W2 employees are people on your payroll

You withhold income tax, Social Security, and Medicare from their paychecks, and they get a W-2 form from you at the end of the year.

Don't count yourself (even if you pay yourself a salary) or 1099 contractors and freelancers.

I agree to Collective Terms of Service & Privacy Policy. Additionally, by providing phone number to continue, I agree to receive calls, incl. autodialed or prerecorded sales calls, from Collective.

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We are experts in the unique needs and challenges of self-employed people and know that our confidence gives others confidence, too. Reach out to say hello and join our team.

We are experts in the unique needs and challenges of self-employed people and know that our confidence gives others confidence, too. Reach out to say hello and join our team.

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Collective provides a suite of tools, back-office support, and general information. Our services are not intended as tax, legal, or professional advice.

* Savings estimates reflect the average 2023 federal self-employment (SE) tax savings for Collective members with an S Corp tax election, based on business profits that would've otherwise been subject to SE tax. Actual savings will vary based on individual circumstances.

** Based on data sourced from Shopify blog, QBO Essentials, QBO Live, Gusto, Taxfyle, Intuit "Tax Pro" Research, LegalZoom and JustAnswer.com as of August 2025.

† Individual tax return packages are billed as an annual, one-time add-on fee.

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