Introduction

Whether you’re a freelancer running a one-person show or a small business owner operating under an LLC, proactive tax planning in 2025 is non-negotiable. The IRS has introduced new thresholds, evolving deduction rules, and AI-based audit triggers, making it more critical than ever to stay ahead.

This 2025 tax planning checklist breaks down everything freelancers and LLCs need to know to maximize deductions, stay compliant, and keep more of their income.

Book your consultation now

1. Choose the Right Business Structure

Why It Matters: Your entity type affects your taxes, liability, and reporting obligations.

✔ Freelancer/Independent Contractor

• Report income on Schedule C (Form 1040)

• Subject to self-employment tax

✔ LLC

• Can elect to be taxed as:

  • Sole Proprietor (default)

  • S Corporation (Form 2553)

  • Partnership (if multi-member)

IRS: Business Structures Overview

 2. Track Every Expense Digitally

Why It Matters: Missing even small expenses means paying more taxes.

Tools to Use:

• QuickBooks Self-Employed

• Wave Accounting

• Keeper Tax

What to Track:

• Office supplies, internet, software

• Travel, meals (50%), home office

• Subscriptions, education, and bank fees

 Also read: 10 Common Tax Mistakes Small Business Owners Make

 3. Estimate & Pay Quarterly Taxes

Why It Matters: Freelancers and LLCs without W-2 withholding must pay estimated taxes 4 times per year.

2025 IRS Estimated Tax Due Dates:

• April 15, 2025

• June 16, 2025

• September 15, 2025

• January 15, 2026

Use Form 1040-ES to calculate payments.

 4. Maximize Deductions & Credits

Why It Matters: More deductions = lower taxable income.

Top 2025 Deductions:

• Home Office Deduction

• Self-Employed Health Insurance Premiums

• Business Mileage (IRS rate: $0.67/mile)

• Startup Costs (up to $5,000 in Year 1)

• Continuing Education & Certification

Pro Tip: Use a tax advisor to spot industry-specific deductions you may overlook.

 5. Set Up Retirement Plans for Tax Savings

Why It Matters: Retirement contributions reduce your taxable income and grow your savings.

Options for Freelancers & LLCs:

IRS: Self-Employed Retirement Plans

 6. Keep Business & Personal Finances Separate

Why It Matters: Mixing accounts causes messy audits and lost deductions.

Steps:

• Open a separate bank account and business credit card.

• Track transfers between accounts as owner’s draw or investment.

 Also read: Tax Planning Strategies for Small Businesses in 2025

 7. Maintain Digital Records & Receipts

Why It Matters: The IRS can audit up to 3 years back — or more if fraud is suspected.

What to Keep:

• Invoices, contracts, receipts

• Bank statements, mileage logs

• 1099s, payroll records (if any)

Store in Google Drive, Dropbox, or encrypted storage.

SBA: Recordkeeping for Small Business

 8. Understand 1099-K Reporting Changes (2025)

Why It Matters: Third-party platforms (PayPal, Stripe, Venmo) must now issue Form 1099-K for transactions over $600 (cumulative).

Make sure your records match 1099s issued — or risk an audit.

IRS: Form 1099-K Overview

9. Work With a Tax Pro

Why It Matters: IRS rules are evolving, and AI audits are increasing. A good tax advisor saves you money and protects you.

Look for:

• CPA or EA credential

• Familiarity with freelance or small business tax law

• Year-round advisory, not just filing

Find an IRS-Certified Tax Preparer

10. Plan for State & Local Taxes

Why It Matters: Freelancers & LLCs often forget about state franchise tax, local income tax, or business license renewals.

Do This:

• Register for a sales tax permit (if selling products)

• Check your state’s tax site for due dates

• Save 10–15% of each payment for tax obligations

Summary Checklist for Freelancers & LLCs (2025)