Sole Business Designer Example
Designer Tax Example: $100K Annual Income (2024 Tax Year)
Income Overview
Gross Business Income: $100,000
Filing Status: Single
Business Type: Sole Proprietorship (Schedule C)
Business Expenses & Deductions
Design-Specific Expenses
Software Subscriptions: $2,400/year
Adobe Creative Cloud: $600
Figma Pro: $144
Webflow: $192
Other design tools: $1,464
Equipment & Technology: $3,500
New laptop: $2,000
Monitor upgrade: $800
Drawing tablet: $400
Camera/lighting: $300
Professional Development: $1,200
Design conferences: $800
Online courses: $400
General Business Expenses
Home Office Deduction: $1,800
Using simplified method: 300 sq ft × $5 = $1,500
Or actual expense method for larger deduction
Internet & Phone: $1,080
Business use percentage: 75%
Total annual cost: $1,440 × 75% = $1,080
Marketing & Website: $800
Domain and hosting: $200
Business cards/portfolio: $300
Social media advertising: $300
Professional Services: $600
Accounting software: $300
Legal/contract review: $300
Transportation: $1,200
Client meetings, networking events
Using standard mileage rate: 67¢/mile
Books & Reference Materials: $300
Total Business Expenses: $12,880
Tax Calculations
Net Business Income
Gross Income: $100,000
Less Business Expenses: -$12,880
Net Profit (Schedule C): $87,120
Self-Employment Tax
Net Earnings Subject to SE Tax: $87,120 × 92.35% = $84,449
Self-Employment Tax Rate: 15.3% (12.4% Social Security + 2.9% Medicare)
Self-Employment Tax: $84,449 × 15.3% = $12,921
Adjusted Gross Income (AGI)
Net Business Income: $87,120
Less: ½ of SE Tax: -$6,461 (deductible portion)
Adjusted Gross Income: $80,659
Qualified Business Income (QBI) Deduction
QBI Deduction: Up to 20% of qualified business income
AGI is below $197,300 threshold, so full deduction applies
QBI Deduction: $87,120 × 20% = $17,424
Taxable Income
Adjusted Gross Income: $80,659
Less: Standard Deduction (2024 Single): $14,600
Less: QBI Deduction: -$17,424
Taxable Income: $48,635
Federal Income Tax
Using 2024 tax brackets:
10% on income up to $11,000: $1,100
12% on income from $11,001 to $44,725: $4,047
12% on income from $44,726 to $48,635: $469
Federal Income Tax: $5,616
Total Tax Liability
Federal Income Tax: $5,616
Self-Employment Tax: $12,921
Total Federal Tax: $18,537
Quarterly Estimated Payments
2025 Quarterly Due Dates:
Q1: April 15, 2025
Q2: June 16, 2025
Q3: September 15, 2025
Q4: January 15, 2026
Estimated Quarterly Payment
Total Annual Tax: $18,537
Quarterly Payment: $18,537 ÷ 4 = $4,634
Tax Summary
Gross Business Income
$100,000
Business Expenses
$12,880
Net Business Income
$87,120
Self-Employment Tax
$12,921
Federal Income Tax
$5,616
Total Tax Liability
$18,537
Effective Tax Rate
18.5%
After-Tax Income
$81,463
Key Takeaways
Tax-Saving Strategies
Maximize Business Deductions: Track all business expenses including software, equipment, home office, and professional development
QBI Deduction: Worth $3,485 in tax savings ($17,424 × 20% tax bracket)
Retirement Contributions: Consider SEP-IRA or Solo 401(k) for additional deductions
Health Insurance: If self-employed, health insurance premiums are deductible
Cash Flow Management
Set Aside 25-30% of income for taxes
Make Quarterly Payments to avoid underpayment penalties
Track Expenses throughout the year for easier tax filing
State Taxes
This example covers federal taxes only
State income tax varies by location (0% to 13.3%)
Some states have no income tax: Texas, Florida, Washington, Nevada, etc.
Important Notes
This is a simplified example for illustration purposes
Actual tax situations vary based on individual circumstances
Consult a tax professional for personalized advice
Keep detailed records and receipts for all business expenses
Consider working with a CPA familiar with creative professionals
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