Start your business with a smart tax plan
Tax Planning for Starting a Business
Before you open your doors or sign your first client, smart tax planning for starting a business helps you set up as a sole proprietor, understand Schedule C, avoid surprises, and build a more profitable, sustainable venture from day one.
Start your business with confidence, not guesswork
Set things up right from day one
When you are launching a new venture, it is easy to focus on branding, websites, and clients while pushing taxes to the bottom of your list. The reality is that early decisions about how you operate as a sole proprietor, how you pay yourself, and how you track expenses can dramatically affect your tax bill for years to come. Nor Cal Tax works with first-time founders, side-hustlers, independent contractors, and service-based businesses who report their income on Schedule C. We explain what it means to run your business as a sole proprietor in plain language, including how self-employment tax works and what records you actually need. If down the road it looks like a different entity might make sense, we can help you understand the basics and when to talk with your legal or accounting team—while keeping today’s focus on doing Schedule C right.
Common tax questions for new business owners
From “What should I be?” to “How much do I owe?”
Most new business owners are unsure how to handle income and expenses when everything flows through Schedule C on their personal return. They wonder how much to set aside for taxes, when quarterly estimated payments start, and what expenses truly count as deductions for a sole proprietor. This page is designed for local service businesses, contractors, gig workers, creative freelancers, and brick-and-mortar shops throughout the Sacramento region who want practical, real-world guidance—without jumping straight into corporations or complex entity setups. To make things easier, we break small business tax planning into simple focus areas you can actually act on:
- Understanding what it means to operate as a sole proprietor and how Schedule C fits into your personal tax return
- Identifying start-up and ongoing deductions such as home office, mileage, equipment, software, branding, and professional fees
- Planning for quarterly estimated taxes so you are not caught off guard in April
- Setting up basic recordkeeping systems that make tax time faster and less stressful
- Knowing when to check in with a tax advisor as your revenue and responsibilities grow, and when it might be time to explore a different structure with your broader advisory team
Our tax planning process for new businesses
Practical planning for real-world Schedule C owners
Our process starts with a discovery and goal-setting conversation where we clarify whether this is a side gig, a full-time leap, or a long-term growth plan that will remain a sole proprietorship for now. From there, we design a tax strategy that fits your income goals, risk tolerance, and the way you want to pay yourself as a Schedule C owner. We review how California small business taxes and self-employment tax apply to your situation, so you know what filings and deadlines to expect and how much to set aside. As your business evolves, we offer year-round guidance—not just once-a-year tax prep—so you can check in when you land a big contract, buy equipment, or see your income jump. The result is a living tax plan that grows with your Schedule C business instead of a one-time conversation you forget about.
Explore more support for new business owners
Local support for Sacramento and Northern California entrepreneurs
Helping sole proprietors thrive, not just survive tax season
Nor Cal Tax is rooted in Sacramento and deeply familiar with the realities of running a small, owner-operated business in Midtown, East Sac, Arden-Arcade, Roseville, Folsom, Rocklin, Elk Grove, and surrounding communities. We understand the mix of local clients, commuting, and multiple work sites that many sole proprietors juggle, and we tailor your Schedule C tax planning accordingly. You can meet with us in our Sacramento office near Cottage Way or work virtually if that better fits your schedule as a busy owner. Our team combines more than 25 years of experience with a family-owned, relationship-driven approach, so you always know who you are talking to. Whether you are launching your first side-hustle or refining an established solo business, you get small business tax planning that is both local and accessible—without stepping into corporation or partnership territory.
Frequently asked questions about starting a business and taxes
Real answers for life after work
Do I need an LLC or S corp for my new business?
For many brand-new businesses, starting as a sole proprietor and filing Schedule C is a perfectly fine—and often the simplest—way to begin. We specialize in working with Schedule C owners, so we help you understand what that looks like, how self-employment tax works, and which deductions apply to you. If your income grows to a point where another structure might make sense, we can explain the general pros and cons and suggest when to loop in a legal or accounting professional for entity changes. We do not currently prepare corporate or partnership returns, so our focus is on helping you get Schedule C right from the start.
How much should I set aside for taxes as a new business owner?
How much to set aside depends on your profit, your other household income, and available deductions and credits. We estimate your total tax—including self-employment tax—and recommend a realistic percentage to save from each payment you receive. This helps you avoid scrambling at tax time or relying on high-interest debt to cover your bill. Together, we build a simple system you can maintain month after month.
When do I have to start paying quarterly estimated taxes?
You generally need to start paying estimated taxes when you expect to owe more than a certain amount that is not covered by withholding from other income. Many Schedule C owners wait until their first big bill to learn this, which can lead to penalties and a lot of stress. We calculate your estimated tax and help you understand the thresholds, deadlines, and safe-harbor options that apply to your situation. Then we turn that into a straightforward payment plan that fits your cash flow.
Can I write off my home office, vehicle, or equipment in the first year?
Many sole proprietors can deduct legitimate home office expenses, vehicle use, and equipment purchases, but the rules are specific and documentation is key. We walk you through what qualifies as a business-use space, how to track mileage, and when first-year deductions or depreciation are available. Claiming these correctly can reduce your tax bill significantly, especially in your start-up year, while reducing audit risk. Our job is to help you take advantage of every deduction you are entitled to as a Schedule C filer.
Can you help if my business is not in Sacramento but I live in Northern California?
Yes, we work with Schedule C business owners across Northern California and beyond using secure virtual tools. Many of our clients live in the Sacramento region while serving customers in other cities or entirely online. Because we focus on small, owner-operated businesses, distance does not change the level of personal attention or the quality of advice you receive. As long as you are filing as a sole proprietor and reporting your business on Schedule C, we can help you plan and prepare your taxes.
