From "Side Hustle" to "Schedule C": Did You Start a Business in 2025?
January 9, 2026
Navigating the shift from "Employee" to "Entrepreneur" this tax season.
Maybe 2025 was the year you finally started your freelance design LLC. Maybe you started taking personal training clients on the weekends. You picked a name, you did the work, and the money hit your bank account. But now it’s January 2026. The champagne has popped, the ball has dropped, and reality is setting in: You have to report that money.
If you are used to typing in a W-2 and hitting "submit," this tax season is going to feel very different. Here is why your return just got more complicated, and why that’s actually a good thing if you handle it right.
1. The "Revenue" vs. "Profit" Mistake
When you are an employee, you get taxed on what you earn. When you are a business owner, you get taxed on what you keep.
Many new business owners panic when they see their total sales figure.
The Panic: "I made $20,000 consulting this year! I can't afford the taxes on that!"
The Reality: You didn't just make money; you spent money to make it. Software subscriptions, home office equipment, advertising, professional licensing, these aren't just expenses; they are a shield against your tax bill.
At Kindled Planning, we help you dig through the year to find the "ordinary and necessary" expenses you might have forgotten about, lowering that taxable number legally.
2. The "Self-Employment Tax" Surprise
This is the number one shock for new entrepreneurs.
When you work a corporate job, your employer quietly pays half of your Social Security and Medicare taxes. You never see it; it just happens.
When you are the boss, you are the employer. That means you are responsible for the full 15.3% (Social Security + Medicare) on your net profit, on top of your regular income tax.
If you haven't been saving for this, the final bill can be a splash of cold water. We help our clients strategize for this year-round so April isn't a surprise party you didn't want to attend.
3. Why You Need a "Schedule C" Expert (Not Just Software)
Tax software is great at asking, "Did you have a business?" It is terrible at asking, "Did you know that your home office might be deductible even if it's small?" or "Did you track the mileage between your client sites?"
The Designer: Might not know that the new iPad used for sketching is a write-off.
The Personal Trainer: Might not realize that the gym membership used to train clients could be partially deductible.
We don't just put numbers in boxes. We look at your specific business, whether it's consulting, trades, or creative work and ensure you are capturing the data that tells the true story of your business finance.
The Bottom Line
Starting a business in 2025 was a huge achievement. Don't let the tax filing in 2026 steal that joy.
If you are staring at your bank statements wondering what counts as an expense, or if you just want to make sure you aren't overpaying the IRS on your new venture, let's talk. You handle the hustle; we’ll handle the "Schedule C."
Written by Kindled Planning: Light the way to your financial future.
A CPA-led personal CFO service helping families and business owners make confident, tax-smart financial decisions, without losing sight of what matters most.
