Let's Talk About the Boring Stuff
I know. Taxes aren't why you became a course creator.
You wanted to teach. To help people. To build something meaningful.
But here's the thing. If you want to keep doing this—and actually keep the money you earn—you need to understand taxes.
Not at an accountant level. Just enough to not get surprised.
Let's make this as painless as possible.
The Mindset Shift
First, a reframe.
Taxes aren't punishment. They're the cost of running a legitimate business.
And legitimate businesses get to write off expenses, plan strategically, and keep more of what they earn.
So instead of dreading taxes, think of them as a game. The rules are set. Your job is to play smart within those rules.
Business Structure Basics
Before we dive into tracking and deductions, let's talk structure.
How you're organized affects how you're taxed.
Sole Proprietorship
If you haven't formed an official business entity, you're automatically a sole proprietor.
What it means:
- Your business income goes on your personal tax return (Schedule C)
- You pay self-employment tax (Social Security + Medicare) on all profits
- Simple to set up—no paperwork required
- No liability protection
Best for: New creators just starting out, income under $50K.
LLC (Limited Liability Company)
An LLC provides liability protection and flexibility.
What it means:
- By default, taxed the same as sole proprietorship (pass-through)
- Can elect to be taxed as S-Corp for potential tax savings
- Liability protection separates personal and business assets
- Requires state registration and fees
Best for: Creators with growing income who want protection.
S-Corporation
An S-Corp lets you split income into salary and distributions.
What it means:
- You pay yourself a "reasonable salary" (subject to payroll tax)
- Remaining profits are distributions (not subject to self-employment tax)
- More paperwork and compliance requirements
- Requires running payroll
Best for: Creators earning $80K+ in profit annually.
Important: I'm not an accountant. Talk to a tax professional about your specific situation. This is education, not advice.
What to Track
Now let's get practical. Here's exactly what you need to track.
Income
Every dollar that comes in from your course business.
Track:
- Course sales (one-time and payment plans)
- Membership or subscription revenue
- Coaching or consulting income
- Affiliate commissions you receive
- Speaking fees
- Sponsorships
- Digital product sales (templates, ebooks, etc.)
How to track:
- Your course platform provides sales reports
- Payment processors (Stripe, PayPal) provide statements
- Export monthly reports and save them
- Use accounting software like QuickBooks, Wave, or FreshBooks
Pro tip: Create a separate business bank account. Makes tracking infinitely easier.
Expenses
Every dollar you spend to run your business.
Track:
- Software and tools
- Contractors and freelancers
- Advertising and marketing
- Education and courses
- Equipment and gear
- Professional services (accountant, lawyer)
- Travel for business purposes
- Home office expenses
- Banking and payment processing fees
We'll go deeper on deductions in a moment.
How to track:
- Use a separate business credit card
- Categorize expenses in accounting software
- Keep receipts (digital is fine)
- Note the business purpose for each expense
Quarterly Estimates
If you expect to owe $1,000 or more in taxes for the year, you need to pay quarterly estimated taxes.
Due dates:
- Q1: April 15
- Q2: June 15
- Q3: September 15
- Q4: January 15 (of the following year)
Missing these means penalties and interest. Set calendar reminders.
What You Can Deduct
Here's where it gets good. Deductions reduce your taxable income.
$10,000 in deductions at a 25% tax rate = $2,500 saved.
Software and Tools
Fully deductible:
- Course platform fees (Teachable, Kajabi, MineCourse, etc.)
- Email marketing software (ConvertKit, Mailchimp)
- Video editing software
- Graphic design tools (Canva, Adobe)
- Project management tools
- Webinar software
- Website hosting
- Domain names
- Accounting software
Track it all. These add up fast.
Contractors and Freelancers
Fully deductible:
- Video editors
- Virtual assistants
- Copywriters
- Graphic designers
- Web developers
- Podcast producers
- Course co-instructors
Important: If you pay anyone $600+ in a year, you need to send them a 1099 form. Get their W-9 before you pay them.
Advertising and Marketing
Fully deductible:
- Facebook/Instagram ads
- Google ads
- YouTube ads
- Podcast advertising
- Influencer partnerships
- PR services
- Marketing consultants
Document the business purpose clearly.
Education and Professional Development
Fully deductible:
- Courses and training (in your field)
- Books and audiobooks
- Conferences and events
- Coaching and mentorship
- Professional certifications
If it makes you better at your business, it's likely deductible.
Equipment and Gear
Deductible (with rules):
- Computer and laptop
- Camera and lighting equipment
- Microphone and audio gear
- Furniture for home office
- Phone (business use percentage)
For items over $2,500, you might depreciate over time or use Section 179 to deduct fully in year one. Ask your accountant.
Home Office Deduction
If you work from home, you can deduct a portion of home expenses.
Two methods:
Simplified method:
- $5 per square foot of dedicated office space
- Max 300 square feet ($1,500 deduction)
- Easy, no receipts needed
Actual expense method:
- Calculate percentage of home used for business
- Apply that percentage to: rent/mortgage, utilities, insurance, repairs
- More paperwork, but potentially larger deduction
Requirements: The space must be used "regularly and exclusively" for business.
Travel
Deductible if for business:
- Flights to conferences or speaking engagements
- Hotels for business trips
- 50% of meals during business travel
- Uber/Lyft/taxi for business purposes
- Mileage for business driving (67 cents/mile in 2026)
Keep records: Date, destination, business purpose, who you met with.
Professional Services
Fully deductible:
- Accountant and bookkeeper fees
- Legal fees for business matters
- Business coaching
- Tax preparation
Investing in professionals often saves you more than they cost.
Banking and Processing Fees
Fully deductible:
- Stripe/PayPal transaction fees
- Bank account fees
- Wire transfer fees
- Currency conversion fees
These small fees add up. Track them.
Health Insurance
If you're self-employed and pay for your own health insurance, it's often deductible.
This goes on your personal return (not Schedule C) but reduces adjusted gross income.
Check with your accountant on specifics.
How Much to Set Aside
Here's the question everyone asks: "How much should I save for taxes?"
The answer depends on your income, but here's a general framework.
The 30% Rule
Set aside 30% of every payment you receive.
This covers:
- Federal income tax (varies by bracket)
- Self-employment tax (~15.3%)
- State income tax (varies by state)
Example:
- You receive a $1,000 payment
- Immediately transfer $300 to a separate savings account
- That $300 is for taxes. Don't touch it.
Adjusting the Percentage
Lower if:
- You're in a lower tax bracket
- You live in a no-income-tax state
- You have significant deductions
Higher if:
- You're in a high tax bracket
- You live in a high-tax state
- You don't have many deductions
When in doubt, save more. A tax refund is better than a surprise bill.
Separate Your Tax Money
Open a separate savings account just for taxes.
Every time revenue hits your business account:
- Calculate your set-aside percentage
- Transfer that amount to your tax savings account
- Pretend that money doesn't exist
When quarterly estimates are due, the money is there waiting.
The Quarterly Rhythm
Here's how to stay on top of taxes throughout the year.
Monthly Tasks (15 minutes)
- Review income and expenses in accounting software
- Categorize any uncategorized transactions
- Transfer tax savings to separate account
- Save/scan any paper receipts
Quarterly Tasks (1-2 hours)
- Calculate estimated tax payment
- Review profit and loss statement
- Pay quarterly estimated taxes
- Adjust set-aside percentage if needed
Annual Tasks (Full day or with accountant)
- Gather all income statements
- Compile all deduction documentation
- Review home office usage
- Prepare and file tax return
- Send 1099s to contractors (by January 31)
Common Mistakes to Avoid
Not Tracking From Day One
Even if you earn $500 your first year, track it.
Build the habit before the stakes are high.
Mixing Personal and Business
Separate bank accounts. Separate credit cards.
Co-mingling makes tracking hard and raises red flags in an audit.
Forgetting Quarterly Estimates
You'll owe penalties if you don't pay throughout the year.
Set reminders. Pay on time.
Over-Claiming Deductions
Only deduct legitimate business expenses.
That dinner with your friend? Not a business expense. That family vacation with a "business meeting"? Risky.
Be honest. The tax savings aren't worth the audit risk.
Not Getting Professional Help
At some point, your business becomes too complex to DIY.
Signs you need an accountant:
- Income over $50K
- You formed an LLC or S-Corp
- You have contractors to 1099
- You're confused about any of this
Good accountants pay for themselves in tax savings and peace of mind.
Tools That Help
Accounting Software
- QuickBooks Self-Employed – Great for solopreneurs, tracks mileage
- Wave – Free, solid for basics
- FreshBooks – User-friendly, good for invoicing
- QuickBooks Online – More robust, grows with you
Receipt Tracking
- Dext (formerly Receipt Bank) – Snap photos, auto-categorize
- Expensify – Good for travel and expenses
- Your phone's camera – Free, just stay organized
Tax Preparation
- TurboTax Self-Employed – Guides you through Schedule C
- H&R Block Self-Employed – Similar, solid support
- TaxAct – Budget-friendly option
- A real accountant – Best option once you're earning well
Finding the Right Accountant
When you're ready for professional help:
What to look for:
- Experience with online businesses and course creators
- Familiar with digital products and passive income
- Proactive advice, not just filing
- Available throughout the year, not just tax season
- Reasonable fees for your business stage
Questions to ask:
- "Have you worked with course creators or online entrepreneurs?"
- "How do you charge—hourly or flat fee?"
- "Can I reach you for questions throughout the year?"
- "What's your approach to minimizing tax liability?"
Where to find them:
- Referrals from other course creators
- Online communities for entrepreneurs
- Specialized firms for online businesses
Expect to pay $500-$2,000+ annually depending on complexity.
The Big Picture
Here's what I want you to take away.
Taxes don't have to be scary.
Track your income. Save for taxes. Claim legitimate deductions. Pay quarterly. Get help when needed.
That's it.
Do these things consistently, and tax season becomes boring. Which is exactly how you want it.
Your One Small Win Today
Here's your action step.
Open a new savings account today.
Call it "Taxes" or "Tax Savings."
The next time you receive a payment, transfer 30% to that account.
That's your tax fund. You just became a business owner who has their finances together.
Next Step: Now that you've got taxes handled, it might be time to get help with other parts of your business. Read Hiring Your First VA: Delegating Without Losing Quality—and learn how to free up your time by outsourcing the right way.