Every business expense reduces your taxable income, but only if you track it. Your truck, tools, materials, job site meals, home office space - it all adds up to real deductions. Get something simple like QuickBooks or even a spreadsheet. Take pictures of receipts with your phone. Track mileage between jobs. The IRS doesn't care about your system, just that you have one and can prove your expenses. Track it or lose it. Most contractors leave thousands on the table because they can't prove what they spent.

The IRS wants their money four times a year, not once. Miss this and you're paying penalties on top of your regular tax bill. Most people find this out when they get hit with a $2K penalty they didn't see coming. Set aside 30% of your profit every quarter and send it in. April, June, September, January. Mark it on your calendar or set up automatic payments. Either way, the government gets paid first or they'll take it with interest later. Use it or don't, but the rules don't change based on what you know.

Most contractors pick sole proprietor because it's simple. Fine, but you'll pay self-employment tax on every dollar of profit. LLC doesn't change your taxes unless you make an election. S-Corp can save thousands in self-employment tax if you're making decent money, but you need payroll setup and proper wage splits. Run the numbers first. For a contractor making $150K profit, the difference between sole prop and S-Corp is about $15K per year. Structure follows your income level, not what sounds good or what your buddy did. Do the math, then decide.