CPA for Freelancers and 1099 Contractors in Los Angeles
MangoBooks, a Los Angeles CPA firm, prepares the federal and California returns of freelancers, independent contractors and other self-employed people, plans their estimated payments and keeps their books when the volume of work calls for it. An individual return with a business typically costs $1,100–$1,800, monthly bookkeeping $650–$1,400 per month, and catch-up bookkeeping for a year of records that were never kept starts from $1,500.
Returns and planning for the self-employed are led by Felix Park, CPA, MBA, a licensed California CPA. The pieces a freelancer deals with each year, Schedule C, self-employment tax, the four estimated payments, the home office and the City of Los Angeles registration, are set out below.
Situations We Handle
A first year of 1099 income. Income from a business you operate or a profession you practice as a sole proprietor is reported on Schedule C of the personal return, whether or not a client sent a Form 1099-NEC: the IRS requires freelance and gig income to be reported even when it comes from part-time or side work, is not shown on an information return or was paid in cash, property or goods. We prepare the Schedule C from your invoices and bank and card statements, figure the self-employment tax on Schedule SE and file the federal and California returns. See Individual Tax Preparation.
A W-2 job and freelance work on the side. The wages and the business go on the same return: Schedule C and Schedule SE for the side work, with the self-employment tax added to the income tax. Because no one withholds tax on the freelance income, we work out whether estimated payments are needed or whether the employer can withhold more instead, which the IRS allows through a new Form W-4. See Tax Planning.
Estimated payments through the year. Sole proprietors generally pay estimated tax when they expect to owe $1,000 or more, due April 15, June 15, September 15 and January 15. California requires estimates when at least $500 ($250 if married filing separately) is expected, paid 30 percent by April 15, 2026, 40 percent by June 15, 2026, nothing in September and 30 percent by January 15, 2027. When we keep the books, the year-to-date profit and loss statement feeds each payment. See Bookkeeping.
Working from home. Part of the home used exclusively and on a regular basis as the principal place of business, or as the place where clients or customers are met in the normal course of the business, qualifies for the deduction; a Schedule C filer figures it on Form 8829 under the regular method or uses the simplified option of $5 per square foot for up to 300 square feet. We work out which method gives the larger deduction with your square footage and expenses and keep the figures on file with the return.
Paying subcontractors. A freelancer who pays another contractor $2,000 or more in a year, starting with 2026 payments, files Form 1099-NEC for that contractor by January 31, which for 2026 payments is February 1, 2027. Whether a helper is a contractor or an employee turns on the IRS common-law rules, behavioral control, financial control and the type of relationship, and Form SS-8 asks the IRS to decide when it is still unclear. We prepare the 1099s from the payment records, and payroll once someone is an employee. See Payroll.
Federal Rules
- Schedule C. Profit or loss from a business you operated or a profession you practiced as a sole proprietor is reported on Schedule C of Form 1040.
- All income counts. Freelance and gig income must be reported even when it is from part-time, temporary or side work, is not reported on a Form 1099-NEC, 1099-K, 1099-MISC or W-2, or is paid in cash, property or goods.
- Self-employment tax. 15.3 percent of net earnings from self-employment, 12.4 percent for Social Security and 2.9 percent for Medicare, figured on Schedule SE when net earnings are $400 or more. The employer-equivalent portion is deducted in figuring adjusted gross income.
- Estimated payments. Generally required when $1,000 or more is expected to be owed when the return is filed, due April 15, June 15, September 15 and January 15, or the next business day when a date falls on a weekend or legal holiday.
- Home office. Part of the home used exclusively and on a regular basis as the principal place of business, or as the place where patients, clients or customers are met in the normal course of business. Schedule C filers figure the deduction on Form 8829, or use the simplified option of $5 per square foot for up to 300 square feet.
- Qualified business income deduction. Eligible taxpayers can deduct up to 20 percent of qualified business income; the deduction may be subject to a taxable income limitation.
- Form 1099-NEC. A business that pays a contractor $2,000 or more in a year, starting with 2026 payments, files Form 1099-NEC by January 31, which for 2026 payments is February 1, 2027.
- Contractor or employee. The IRS weighs behavioral control, financial control and the type of relationship; Form SS-8 asks the IRS to decide when it is unclear.
- Records. The IRS advises keeping records that support a return for three years and employment tax records for at least four years.
California Specifics
- Estimated payments. Required when at least $500 ($250 if married filing separately) is expected, paid 30 percent by April 15, 2026, 40 percent by June 15, 2026, nothing in September and 30 percent by January 15, 2027.
- Forming an LLC. A single-member LLC is disregarded for income tax by default, so the business stays on Schedule C, while California requires the LLC to file Form 568 and pay the $800 annual tax every year until it is cancelled; the first-year exemption covered only tax years 2021 through 2023. See New Businesses.
- Electing S corporation status. The company then pays its owner reasonable compensation through payroll before non-wage distributions and pays California 1.5 percent of its income with an $800 minimum, waived for the first taxable year. See S Corporation Owners.
- City of Los Angeles. A self-employed person working in the city registers with the Office of Finance for a Business Tax Registration Certificate, and one whose business address is outside the city and who works in the city seven days or more in a calendar year must register too. The renewal is due by the last day of February, or the following Monday when that day is a Sunday. A registered business with worldwide gross receipts of $100,000 or less pays no business tax when it renews on time, and registered creative artists with up to $300,000 of gross receipts from their creative activities have an exemption of their own.
Where We Work
Our work for freelancers covers Los Angeles, including the San Fernando Valley communities around our office in Woodland Hills and the Conejo Valley. Meetings are scheduled in advance, and documents are exchanged electronically. A freelancer in the City of Los Angeles also registers with the city's Office of Finance; see CPA in the San Fernando Valley and CPA for the Conejo Valley.
Services Involved
- Individual Tax Preparation: Form 1040 with Schedule C and Schedule SE, and California Form 540
- Tax Planning: the four estimated payments and the LLC or S corporation question
- Bookkeeping: monthly books, or catch-up for a year that was never recorded
- Payroll: Forms 1099-NEC for subcontractors, and payroll once there is an employee
- Business Formation: the LLC or corporation and the S corporation election when the numbers support it
Fees
| Service | Typical range |
|---|---|
| Individual return with a business | $1,100–$1,800 |
| Monthly bookkeeping | $650–$1,400 per month |
| Catch-up bookkeeping | From $1,500 |
| Payroll | $175–$400 per month |
| LLC or S corporation setup | From $950 plus state fees |
Tax planning is quoted after a consultation. Fees depend on the scope of work and are set out in a written engagement letter before work begins. See the Fee Guide.
Frequently Asked Questions
Do I have to report freelance income if I never received a Form 1099?
Yes. Income from a business you operate or a profession you practice as a sole proprietor is reported on Schedule C whether or not a client sent a form: the IRS requires freelance and gig income to be reported even when it comes from part-time or side work, is not shown on a Form 1099-NEC, 1099-K or other information return, or was paid in cash, property or goods. A client that pays you $2,000 or more in a year, starting with 2026 payments, files Form 1099-NEC by January 31. See Individual Tax Preparation.
What is self-employment tax, and who pays it?
Self-employment tax is the Social Security and Medicare tax on net earnings from self-employment, figured on Schedule SE. The rate is 15.3 percent: 12.4 percent for Social Security and 2.9 percent for Medicare. Schedule SE is required when net earnings from self-employment are $400 or more, and the employer-equivalent portion of the tax is deducted in figuring adjusted gross income.
When does a freelancer make estimated tax payments?
Federal estimates are generally required when you expect to owe $1,000 or more when the return is filed, due April 15, June 15, September 15 and January 15. California requires estimates when at least $500 ($250 if married filing separately) is expected, paid 30 percent by April 15, 2026, 40 percent by June 15, 2026, nothing in September and 30 percent by January 15, 2027. Someone with a W-2 job as well can instead have the employer withhold more on a new Form W-4. We set the four payments from the year-to-date figures. See Tax Planning.
Can I deduct a home office?
Yes, when part of the home is used exclusively and on a regular basis as the principal place of business, or as the place where clients or customers are met in the normal course of the business. A Schedule C filer figures the deduction on Form 8829 under the regular method, or uses the simplified option of $5 per square foot for up to 300 square feet.
Does a freelancer in Los Angeles need a city business tax registration?
A self-employed person working in the City of Los Angeles registers with the Office of Finance for a Business Tax Registration Certificate, and the city also requires it of a self-employed person whose business address is outside the city and who works in the city seven days or more in a calendar year. The renewal is due by the last day of February, or the following Monday when that day is a Sunday. A registered business with worldwide gross receipts of $100,000 or less pays no city business tax when it renews on time, and registered creative artists with up to $300,000 of gross receipts from their creative activities have an exemption of their own. See CPA in the San Fernando Valley.
What does a freelancer's tax return cost, and should I form an LLC or S corporation?
An individual return with a business typically costs $1,100–$1,800, and monthly bookkeeping $650–$1,400 per month when the books are kept during the year. Forming a single-member LLC does not change the income tax: the LLC is disregarded by default, so the business stays on Schedule C, and California charges the LLC an $800 annual tax. An S corporation election adds payroll for the owner's reasonable compensation and California's 1.5 percent tax on the company's income. We compare the tax under each structure with your figures before anything is filed; LLC or S corporation setup starts from $950 plus state fees. See Business Formation and the Fee Guide.
Schedule a Consultation
Call (213) 255-4665 or send us a short message about your situation.
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