Solo LLC Tax Guide

Everything a single-member LLC or sole proprietor needs to know about Schedule C deductions, self-employment tax, quarterly estimated payments, and expense tracking. All information is sourced from IRS publications and applies to the 2025 tax year.

What can I write off as a single-member LLC?

As a single-member LLC filing Schedule C, you can deduct any expense that is both ordinary (common in your line of work) and necessary (helpful and appropriate for your business). The IRS does not publish a fixed list — if the expense directly supports your business, it is likely deductible.

Common Schedule C deduction categories include:

Source: IRS Publication 535 — Business Expenses

How does a single-member LLC file taxes?

A single-member LLC is a "disregarded entity" for federal tax purposes. You report all business income and expenses on Schedule C, which you file as part of your personal Form 1040. You also file Schedule SE to calculate self-employment tax (Social Security and Medicare) on your net business profit.

The filing flow:

1. 1Tally your business income (all 1099s, direct deposits, and cash received).
2. 2Subtract your business expenses on Schedule C, line by line.
3. 3Your net profit flows to Form 1040 (income) and Schedule SE (self-employment tax).
4. 4Deduct half of your SE tax as an adjustment to income on Form 1040.

Source: IRS Schedule C Instructions

What is the home office deduction for self-employed?

The home office deduction lets self-employed individuals deduct a portion of their housing costs if they use part of their home regularly and exclusively for business. There are two methods:

The "exclusive use" test is strict: a desk in your living room generally does not qualify, but a spare bedroom used only as an office does. See our home office deduction guides for details on internet, phone, and other home office expenses.

Source: IRS Publication 587 — Business Use of Your Home

How do I track business expenses for my LLC?

The IRS requires "adequate records" to support your deductions — receipts, bank statements, and a clear record of each expense's business purpose. The most effective approach is real-time tracking: use a dedicated business bank account, categorize transactions as they post, and keep digital copies of receipts.

What the IRS expects you to document for each expense:

• Amount paid
• Date of the expense
• Business purpose (why the expense was necessary)
• Who was involved (for meals and entertainment: names and business relationship)

Digital records are acceptable — you do not need paper receipts. A bank or credit card statement is sufficient documentation for most expenses under $75. For meals, travel, and gifts, keep more detailed records regardless of amount.

Source: IRS Publication 463 — Travel, Gift, and Car Expenses

What is the self-employment tax rate?

The self-employment tax rate is 15.3% of your net business profit — 12.4% for Social Security (on earnings up to $176,100 for 2025) and 2.9% for Medicare (on all earnings). An additional 0.9% Medicare surtax applies to earnings above $200,000 for single filers ($250,000 for married filing jointly).

You can deduct the employer-equivalent portion — half of your self-employment tax — as an adjustment to income on Form 1040. This reduces your adjusted gross income, which can lower your income tax bracket and affect other deductions. This adjustment is taken on your 1040, not on Schedule C.

Source: IRS Schedule SE Instructions

Do I need to make quarterly estimated tax payments?

Generally yes. If you expect to owe $1,000 or more in federal tax when you file, the IRS requires quarterly estimated payments. This applies to most self-employed individuals, since employers don't withhold taxes from your business income.

The safe harbor rule: to avoid underpayment penalties, pay at least 100% of your prior year's total tax liability through quarterly payments and withholding (110% if your adjusted gross income exceeded $150,000). Alternatively, pay at least 90% of your current year's tax.

Use Form 1040-ES to calculate and submit your quarterly payments. You can pay online via IRS Direct Pay or EFTPS.

Source: IRS Form 1040-ES Instructions

Can I deduct my home internet and phone for my LLC?

Yes. The business-use portion of your home internet is deductible on Schedule C Line 25 (Utilities). A dedicated business phone line is 100% deductible. If you use your personal phone for business, you can deduct the business-use percentage — but the first landline to your home is never deductible under IRS rules, regardless of business use.

For shared internet: estimate your business-use percentage and apply it to your monthly bill. Example: $80/month × 70% business use = $56/month deductible ($672/year). Keep a brief written note documenting how you determined the percentage.

See our detailed guides: Internet Service deduction and Business Phone deduction.

Source: IRS Publication 535 — Business Expenses

What is the difference between Schedule C Line 18 and Line 27a?

Line 18 (Office expense) covers supplies, software subscriptions, SaaS tools, and other costs directly related to running your office. Line 27a (Other expenses) is a catch-all for legitimate business expenses that don't fit into Lines 8–26 — such as bank fees, payment processing charges, web hosting, domain names, and coworking memberships.

The key difference: Line 18 expenses are reported as a single total. Line 27a expenses must be itemized individually in Part V of Schedule C. Browse our full deduction reference to see which line each expense maps to.

Source: IRS Schedule C Instructions

Updated for the 2025 tax year. Judy is a bookkeeping tool, not a CPA or tax advisor. Consult a qualified professional for tax filing and compliance decisions.