Taxes Resource Center

Taxes, decoded for trades.

Sales tax, quarterly estimates, deductions, and 1099s — plain English, no jargon, written for service-business owners.

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Sales Tax

When service businesses owe sales tax, nexus rules, and how to use a resale certificate.

Sales Tax for Service Businesses: A Plain-English Guide

Most US states tax tangible goods but not services. About 20 states tax some services — and almost every state taxes the materials a service business resells. If you install or supply parts, you almost certainly have a sales tax obligation.

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Sales Tax Nexus: When You Owe Tax in Another State

Nexus is the connection between your business and a state that creates a tax obligation. Physical nexus = office, employees, inventory, or jobs in-state. Economic nexus = crossing the state's sales threshold (typically $100k or 200 transactions per year).

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Resale Certificates: When and How to Use One

A resale certificate is a document that tells your supplier you are buying for resale, so they should not charge you sales tax. You then collect sales tax from the end customer. It is free to get from your state's Department of Revenue.

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Quarterly & Income Tax

Estimated taxes, self-employment tax, and the percentage to set aside from every payment.

Quarterly Estimated Taxes: A Survival Guide for the Self-Employed

If you expect to owe more than $1,000 in federal tax for the year, you must pay quarterly estimates on April 15, June 15, September 15, and January 15. Most self-employed people set aside 25–30% of net income to cover federal + self-employment tax.

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Self-Employment Tax: What It Is and How to Reduce It

Self-employment (SE) tax is 15.3% on your business's net profit — 12.4% for Social Security and 2.9% for Medicare. It is on top of federal income tax. It exists because you are paying both halves of payroll tax that an employer would normally split with you.

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How Much to Set Aside for Taxes (and Where to Put It)

Move 25–30% of every customer payment into a separate savings account labeled 'Taxes'. Higher earners or those in high-tax states (CA, NY, OR) should bump to 30–35%. Treat that account as untouchable until you pay quarterlies.

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Deductions & Write-Offs

Every legitimate Schedule C deduction — vehicle, home office, tools, software, and more.

Schedule C Deductions: The Master Checklist for Service Businesses

Schedule C lets you deduct any ordinary and necessary business expense from your gross income. The biggest categories for service businesses are vehicle (standard mileage rate or actual), home office, materials, tools, software, insurance, and contractor labor.

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Home Office Deduction: Two Methods, Which Wins

Simplified method: $5 per square foot, up to 300 sq ft = $1,500 max. Actual method: a percentage of your real home expenses (rent/mortgage interest, utilities, insurance). Actual usually wins for anyone over ~$1,500 of qualifying expense, but requires records.

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1099s & Workers

How to tell contractors from employees and how to issue 1099-NECs without penalties.

1099 vs W-2: Contractor or Employee?

The IRS uses three categories — behavioral control, financial control, and relationship — to decide if a worker is a contractor or employee. If you tell them when, where, and how to work, provide tools, and pay them regularly, they are probably an employee, no matter what the contract says.

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How to Issue a 1099-NEC: Step-by-Step

Collect a W-9 from every contractor before paying them. By January 31, send Form 1099-NEC to each contractor who received $600+ in cash/check/ACH AND file with the IRS. The easiest way is electronic filing via the IRS IRIS portal or a payroll/tax tool.

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