Who I work with
- Freelancers and independent contractors paid on Form 1099-NEC
- Gig and platform workers (rideshare, delivery, online marketplaces) who receive Form 1099-K
- Sole proprietors and single-member LLC owners who report business income on Schedule C
- People with a W-2 job plus side-business income
Your business income is reported on your personal return: Form 1040 with Schedule C, and California Form 540. This includes single-member LLCs taxed as sole proprietorships. I don't prepare partnership (Form 1065) or S-corporation (Form 1120-S) returns, and I don't offer bookkeeping.
What is Schedule C?
Schedule C (Form 1040), Profit or Loss From Business, is the form sole proprietors and most single-member LLC owners use to report business income and deductible business expenses. The net profit from Schedule C flows onto your personal Form 1040 and is generally subject to both income tax and self-employment tax. California has its own rules for reporting business income on your Form 540.
How self-employment tax works
Self-employment tax is Social Security and Medicare tax for people who work for themselves. The rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. You generally owe it, and must file Schedule SE, if your net earnings from self-employment are $400 or more.
- The Social Security portion applies only up to an annual earnings limit that changes each year; the Medicare portion has no limit.
- An additional 0.9% Medicare tax applies to earnings above $200,000 (single or head of household), $250,000 (married filing jointly) or $125,000 (married filing separately).
- You can deduct the employer-equivalent portion of self-employment tax when figuring your adjusted gross income.
1099-NEC and 1099-K: what they mean for you
Form 1099-NEC reports nonemployee compensation — what a client paid you as an independent contractor.
Form 1099-K reports payments you received through payment cards, payment apps, and online marketplaces. Under current law, payment apps and online marketplaces must send a 1099-K when your payments for goods or services exceed $20,000 and more than 200 transactions in a year. (The One, Big, Beautiful Bill retroactively restored this threshold.) Payment-card processors report regardless of amount, and some platforms send 1099-Ks below the threshold.
Important: whether or not you receive a 1099, you must report all of your business income on your tax return.
Quarterly estimated tax payments
Because no employer withholds tax from self-employment income, you generally pay during the year through quarterly estimated payments. The IRS generally requires estimated payments if you expect to owe $1,000 or more for the year after withholding and credits. California generally requires them if you expect to owe at least $500 ($250 if married/RDP filing separately).
| Payment | Due date | Federal (IRS) | California (FTB) |
|---|---|---|---|
| 1 | April 15, 2026 | Covers Jan. 1 – Mar. 31 | 30% of annual estimate |
| 2 | June 15, 2026 | Covers Apr. 1 – May 31 | 40% |
| 3 | September 15, 2026 | Covers Jun. 1 – Aug. 31 | 0% (no California payment due) |
| 4 | January 15, 2027 | Covers Sep. 1 – Dec. 31 | 30% |
If a due date falls on a weekend or legal holiday, the payment is on time if made the next business day. Note that California's schedule is front-loaded and differs from the federal one. Sources: IRS and California Franchise Tax Board.
Records that make tax time easier
- All 1099-NEC, 1099-K and 1099-MISC forms, plus your own record of income (invoices, platform reports, bank deposits)
- Business expense receipts and statements, organized by category
- A mileage log if you use your car for business
- Home office square footage and household costs, if you work from home
- Health insurance premiums and retirement contributions you paid as a self-employed person
- Dates and amounts of every federal and California estimated payment you made