Filing taxes as a freelancer or small business owner in the USA can feel like untangling a complex maze of regulations. It is frustrating and time-consuming. But taxes are a must. So, what’s the cost to file taxes? The answer depends on your income, business setup, and how you choose to file. Some freelancers spend next to nothing, while small business owners might face bigger bills. Let’s understand the cost to file taxes and help you plan for a smoother tax season in 2025!
Why Tax Filing Costs Vary Across the USA
The cost to file taxes isn’t one-size-fits-all. Freelancers and small business owners have unique setups. Your income, deductions, and business structure play a big role. So does whether you DIY, use software, or hire a pro. Understanding these factors helps you budget for taxes as a freelancer or taxes as a small business owner.
Income and Complexity
Higher earnings mean more tax forms. A freelancer with a few clients has simpler taxes than a small business with employees. Complex deductions, like equipment or travel expenses, also bump up the cost to file taxes.
Filing Method
You’ve got options - file yourself, use tax software, or hire an accountant. Each choice affects the cost to file taxes. DIY is cheapest but risky if you miss something. Software balances cost and ease. Pros cost more but save time and stress.
Business Structure
Freelancers often file as sole proprietors. Small businesses might be LLCs, S corps, or partnerships. Each structure has different tax forms and rules. More complex structures increase the cost to file taxes.
What is DIY Tax Filing?
Filing taxes as a freelancer or taxes as a small business owner yourself is the cheapest route. It’s best for simple setups, like freelancers with straightforward income. But it takes time and know-how. Here’s what to expect.
What It Costs
DIY filing is often free if you qualify for IRS Free File. This works for freelancers with low to moderate income. Otherwise, you might spend on basic tax software (more on that later). Expect $0-$50 for forms and tools.
Pros and Cons
DIY saves money. You control the process. But mistakes are easy. Missing deductions or misfiling forms can trigger audits or penalties. If taxes as a freelancer involve multiple income sources or taxes as a small business owner include payroll, DIY gets tricky.
Tips for Success
Keep organized records. Track income and expenses all year. Use IRS resources like Publication 334 for small businesses. Double-check your math. If your taxes are complex, consider other options.
Why Use Tax Software for Filing Taxes?
Tax software is a popular choice for taxes as a freelancer and taxes as a small business owner. It’s user-friendly and catches errors. Programs guide you through forms and deductions. Here’s the scoop.
What It Costs
The cost to file taxes with software varies. Basic versions for freelancers start low, often $20-$50 for federal and state filing. Small businesses with payroll or complex deductions might pay $100-$200 for premium versions. Extra fees for e-filing or support can add up.
Popular Options
The Fino Partners, H&R Block, and TaxAct are go-to choices. The Fino Partners are great for freelancers. It suits small businesses. Each offers step-by-step guidance and deduction finders.
Pros and Cons
Software is faster than DIY. It spots deductions you might miss. Most programs handle self-employment taxes and business forms. But it’s not foolproof. Complex businesses might need more help. Costs rise with add-ons like audit protection.
Tips for Success
Choose software that matches your needs. Freelancers can stick with basic versions. Small business owners should pick programs with Schedule C or payroll support. Start early to avoid last-minute glitches.
Why Hire a Professional to Do Your Taxes?
Hiring an accountant or tax pro is the priciest way to file taxes as a freelancer or taxes as a small business owner. It’s ideal for complex taxes or if you want peace of mind. Here’s what you need to know.
What It Costs
The cost to file taxes with a pro depends on your situation. Freelancers with simple taxes might pay $150-$300. Small businesses with employees, inventory, or multiple income streams could pay $500-$2,000 or more. CPAs charge more than enrolled agents or bookkeepers.
Pros and Cons
Pros save time and stress. They find deductions and avoid errors. They can represent you in audits. But the cost to file taxes is high. You’ll need to share detailed financial info, which takes prep work.
When to Hire a Pro
Consider a pro if -
- Your taxes as a freelancer include multiple income sources or 1099s.
- Your taxes as a small business owner involve payroll, sales tax, or business losses.
- You’re new to taxes and want expert guidance.
- You’ve faced audits or IRS issues before.
Tips for Success
Shop around for quotes. Look for CPAs or enrolled agents with small business experience. Provide organized records to keep costs down. Ask about year-round tax planning to maximize savings.
Choosing the Right Filing Method
Deciding how to file taxes as a freelancer or taxes as a small business owner depends on your budget, time, and tax complexity. Here’s a quick guide to pick the best option.
Freelancers
- Simple taxes (one income source, few deductions) - DIY or basic software ($0-$50).
- Moderate complexity (multiple 1099s, deductions) - Mid-tier software or budget accountant ($50-$300).
- Complex taxes (side gigs, investments) - Hire a pro ($150-$500).
Small Business Owners
- Sole proprietors (no employees) - Software or budget pro ($50-$300).
- LLCs or S corps (employees, payroll) - Mid-tier software or pro ($200-$1,000).
- Complex businesses (multiple locations, inventory) - Experienced CPA ($500-$2,000+).
Test software with free trials. Get quotes from multiple pros. Choose what fits your needs and budget.
Also Read | QuickBooks Online Accountant for Freelancers: Key Benefits
Final Thoughts
Yes, indeed the cost to file taxes as a freelancer or small business owner varies. However, we can make it manageable with the right plan. DIY filing is cheap but risky for complex taxes. Software offers a balance of cost and ease, while pros provide peace of mind at a higher price. Factor in hidden costs like quarterly taxes or bookkeeping. Whether you’re filing taxes as a freelancer or small business owner, preparation is key. Ready to tackle your taxes? Connect with The Fino Partners now!
