First-Year Freelancer Tax Checklist

What to set up when you start, what to do with every payment, and what to check each quarter and before year-end.

By Thomas P. Checked against IRS publications Updated

Your first year as a freelancer is when habits get set — good or expensive. This checklist covers what to do in roughly the order you’ll need it.

When you start

  1. Open a separate bank account. Every business payment in, every business expense out. It makes bookkeeping and deductions far easier and keeps a clear line between business and personal money.
  2. Decide on a structure. You are a sole proprietor by default. An LLC adds legal separation; an S corporation election can save tax later at higher profits. See S corp vs LLC.
  3. Consider an EIN. A free employer identification number from the IRS lets you give clients a number other than your Social Security number on Form W-9.
  4. Check local requirements. Business licenses, state registration, and sales tax if you sell taxable goods or services.
  5. Set your rate. Price for taxes, expenses and unbilled time with the freelance hourly rate calculator.

Every time you get paid

  1. Move your tax percentage to savings. The set-aside calculator gives you one number — often 20–30% including state tax.
  2. Record the payment and the client. Not every client will send a 1099, and you owe tax regardless. See 1099-NEC vs 1099-K.

Every month

  1. Categorize expenses and save receipts. Review the list of deductions freelancers often miss.
  2. Log business mileage with dates. See the 2026 mileage rates.

Every quarter

  1. Pay estimated tax. Due April 15, June 15, September 15 and January 15. Use the quarterly calculator and pay online.

First-year tip: if you had a W-2 job last year and owed little tax, the prior-year safe harbor can make your first-year estimates very small. You’ll owe the rest in April, so keep saving anyway.

Before December 31

  1. Review retirement options. A SEP-IRA can be opened and funded up to your filing deadline; Solo 401(k) deadlines are stricter and vary by provider, so decide before year-end. See SEP-IRA vs Solo 401(k).
  2. Buy needed equipment you were planning anyway — purchases made by December 31 count for this year.
  3. Check health insurance. Premiums you pay yourself are usually deductible. How it works.

At tax time

  1. Collect 1099s and match them to your own records.
  2. File Schedule C and Schedule SE with your Form 1040, or hand your records to a preparer.
  3. Reset for next year: update your set-aside percentage and estimated payments using this year’s real numbers.