3 Ways to File Self-Employment Taxes

Tax season is officially upon us, and for many taxpayers, it’s time to decide how they will prepare their tax returns this year. Let’s face it: Filing taxes can be complicated when you are self-employed. If you’re interested in saving time or money on tax filing, now is a good time to look at all of your options and choose the best one for your situation.

You generally have three ways to file your self-employed taxes:

• E-filing your taxes online using software or a website

• Hiring a CPA to file your taxes for you

• Doing your taxes by hand, using IRS tax forms

We'll explain each option, outline the pros and cons of each option, and tell you roughly how much it'll cost you.

Option 1: Preparing and e-filing your own tax return

Online tax software, also known as e-filing platforms, has revolutionized the way individuals file their taxes. offering a convenient and often more accessible alternative to traditional paper filing and in-person tax preparation services. 

These platforms leverage intuitive interfaces to guide filers through the tax filing process step by step, usually by breaking each line of your tax return down into a simple “interview question” that’s easy to understand. “Did you have business income in 2023?” and “How much did you spend this year on medical expenses?” are examples of questions you’ll need to answer.

Most of these tools will have knowledge bases where you can find answers to your questions, as well as customer support teams that can help you troubleshoot any technical issues that come up.

Pros of using online tax software:

• User-friendly option: Online software makes it easy to break down the tax preparation process into digestible steps

• Accessibility: These software programs can be accessed from anywhere with an internet connection, sometimes even mobile apps.

• Built-in error checks: These algorithms will help catch mistakes, hopefully saving you money.

• Customer support: Guidance and support are often available throughout the filing process.

Cons of using online tax software:

• Complex tax situations: If you have a complicated tax situation, multiple revenue streams, or a lack of good bookkeeping, software may not be the right fit.

• Costs: Depending on which features you need or how many states you need to file in, costs can quickly escalate.

How much you’ll spend: Your costs can vary quite a bit depending on how complex your tax return is. Most tax filing software offers free federal filing for basic 1040 returns without itemized deductions. However, costs scale up for more complex tax situations common for self-employed filers. However, if you’re self-employed and using paid tax filing software, you’ll likely be required to choose one of the premium versions of that software in order to be able to file a Schedule C. Depending on which software you choose and if you need federal and state return filing, the princess can range from $50 to $200+. 

There are tons of online tax software available, all with varying levels of guidance built into the experience. Some will only briefly describe how to answer each question, whereas others will have suggestions for you based on how you’ve answered previous questions.

When to choose this option: If you’re looking for a more affordable option, or if your tax records are already organized, using online tax filing software is a great choice. Found users—that means you! Your Found app has a complete record of your business income and expenses, as well as a pre-filled Schedule C tax form that you can reference, which will make the filing process much simpler and shorter.

Option 2: Hiring someone to file for you

If navigating tax software feels daunting, there’s another option: Handing the reins over to a pro. A Certified Public Accountant (CPA) or registered tax preparer can help prepare your tax return for you. They’ll request that you share documentation on your income, expenses, dependents, past tax filings, and other relevant information. After that, they'll use that to prepare your entire tax return on your behalf—usually with minimal time needed. They’ll also officially sign off on your prepared tax return, which means they’ll be partially responsible for handling any questions or disputes from the IRS.

You can use an independent tax preparer or accountant or a tax preparation company offering in-person preparation services. If you’d like to work with an independent preparer or accountant, you can ask your network for referrals or search on the IRS website for credentialed preparers in your area. If you use a larger tax preparation service, you can book an appointment on the website of any tax preparation company. If you decide to go this route, you won’t be alone. According to the IRS, 53% of all taxpayers used a paid tax professional in 2021.

Pros of hiring a CPA:

• Expert help: Tailored guidance and tax planning strategies customized to your specific circumstances.

• Stress-free filing: A CPA or tax preparer’s expertise will help you navigate intricate tax laws and regulations, maximizing deductions and minimizing tax liabilities.

• Personalized support: Your preparer will often represent in the event of audits or IRS inquiries.

Cons of hiring a CPA:

• Higher costs: Compared to online software, hiring a CPA or tax preparer often comes with a higher price tag

• Limited availability: CPA and tax preparer calendars fill up fast, so finding someone with experience in your industry who has availability may take a few tries. 

• Scheduling appointments, coordinating with a CPA, and answering questions may require additional time and effort

How much you’ll spend: According to a survey by the National Society of Accountants, a tax professional's average range for tax filing services is $176 - $457 per tax return. Pricing will depend on a few factors, including your preparer’s hourly rate, the complexity of your tax situation, and your location. Many preparers will charge you based on a minimum filing fee, an hourly rate, and additional fees for specific forms or tax situations. For example, your preparer may charge an extra fee if you need to file a Schedule C. However, if you find a tax preparer with a tax preparation company, you’ll likely find a lower price (in the range of $50 - $400). 

Whether you use a tax prep company or an independent tax preparer, there’s a chance self-employed taxpayers will pay the higher end of that price range. Reporting multiple income sources and filing extra forms like Schedule Cs can often drive up the price of your return, so be sure to ask about pricing structure so you aren’t blindsided by fees. 

When to choose this option: Hiring someone to file for you is a good option for small business owners or self-employed people willing to spend a bit more for the peace of mind of having a tax expert prepare your tax return for you, especially if it’s your first year filing self-employed taxes or if you have a more complex return. If your return involves itemizing deductions, multiple types of income, or lots of unorganized receipts and documentation that you don’t have time to go through—and if you’re not feeling confident about filing on your own—this option is for you.

If you’re a Found customer, it’s easy to collaborate with your accountant right from your Found account. Easily share Found account activity, reports, and more with your financial pro, and cut down on the back-and-forth. 

Option 3: Filing by hand

You can also fill out your tax forms without the help of a software or a tax preparer. This option involves downloading a blank copy of the Form 1040, filling it out by hand (along with any other forms that it indicates you need to submit, like a Schedule C), and submitting your forms and payment on your own.

Sound like a lot of work? It’s because it is, and it’s not for the faint of heart. If you really want to file your taxes before the IRS starts accepting e-filed returns in late January, or are a tax pro who likes the challenge of preparing your tax return without guidance, this is the option for you.

Pros of filing by hand:

• Cost-effective: Filing your taxes by hand is the most cost-effective way to do it. You won't have to pay for any software or professional services.

• Privacy: Some people may prefer to do their own taxes to keep their financial information private.

Cons of filing by hand:

• Time-consuming: It can be very time-consuming to do your own taxes by hand. You will need to gather all of your tax documents, fill out all of the forms correctly, and make sure that everything is accurate.

• Complex: The tax code can be very complex, and it can be easy to make mistakes if you don't know what you're doing. These mistakes could cost you money.

• Stressful: Doing your own taxes can be stressful, especially if you are not familiar with the tax code. You may worry about making mistakes or missing something important.

How much you’ll spend: Well, this option will be completely free. Tax forms are free to download directly from the IRS website, and the IRS also offers some free payment methods if you end up owing taxes.

When to choose this option: If you’re a pro at taxes, or get a kick out of doing everything yourself, then this is the option for you. You’ll also need to use this option if you want to submit your tax return before the IRS starts accepting e-filed returns in late January.

We don’t recommend taking this option lightly; if you file completely on your own, you’ll miss out on even the most minimal level of guidance from free tax filing software. If you’re choosing this option to save money, consider using free filing software or looking for free tax prep assistance in your area. If you do end up doing your taxes by hand, then you can reference the pre-filled Schedule C in your Found app to breeze through reporting your business income.

Three things to remember when preparing your tax return

Choosing a tax filing method can be intimidating; there are a ton of options out there, and it’s tough to know if you’re getting the biggest bang for your buck. Here are some tips to keep in mind throughout the decision-making process, as well as when you’re filing:

• Track business income and expenses accurately throughout the year. This is where a business bank account comes in handy. You don’t want to spend hours untangling personal and business expenses. 

• Do your research on available discounts. It’s the season for discounts, so be sure to shop around.

• Be realistic about your bandwidth. Your time as a business owner is valuable. If you’re on the fence between hiring someone and doing it yourself, look at your upcoming calendar. If you’re going to be busy or traveling, it could be worth the investment to outsource this year. 

Disclaimer: The information on this website is not intended to provide, and should not be relied on, for tax advice. Restrictions may apply, see TurboTax terms.