Solo founders: keep more of what your company earns in 2026
Track business income and expenses, estimate quarterly taxes from your real numbers, and compare Solo 401(k) and SEP IRA options with free calculators.
Where solo founders typically get paid
W-2 or 1099?
Most solo founders are self-employed: a sole proprietor or single-member LLC reports profit on Schedule C and owes 15.3% self-employment tax on 92.35% of net profit. An S-corp election changes this, since you then pay yourself W-2 wages through payroll.
The 20% QBI deduction is permanent
Qualified business income can earn a deduction of up to 20%, now permanent. For 2026, limits start at $201,750 of taxable income ($403,500 joint), and consulting-type businesses (SSTBs) phase out completely at $276,750 ($553,500 joint).
Solo 401(k) can shelter the most
If you have no employees other than a spouse, a Solo 401(k) lets you defer up to $24,500 in 2026 as the employee and add employer contributions, up to $72,000 total. Catch-ups of $8,000 (50+) or $11,250 (ages 60-63) go on top. A SEP IRA is simpler but takes employer contributions only.
Big equipment buys can be expensed
Section 179 allows up to $2,560,000 of qualifying property for 2026, and 100% bonus depreciation is permanent for property acquired after Jan. 19, 2025.
Pay quarterly to avoid penalties
If you expect to owe $1,000 or more, 2026 estimates are due Apr 15, Jun 15, Sep 15 2026 and Jan 15, 2027. Half of your self-employment tax is deductible in figuring AGI.
Solo founder questions, answered
Should my startup be an LLC or an S-corp for taxes?+
An LLC by default is taxed like a sole proprietorship, with SE tax on all net profit. An S-corp election means paying yourself a reasonable W-2 salary, which can lower SE tax on remaining profit but adds payroll costs; the free S-corp calculator can show the tradeoff for educational purposes.
How much can I put in a Solo 401(k) in 2026?+
Up to $24,500 as an employee deferral plus employer contributions, capped at $72,000 total, with catch-ups on top ($8,000 if 50+, $11,250 at ages 60-63). Compensation counted is capped at $360,000, and the plan is for owners with no employees other than a spouse.
Do I get the QBI deduction as a founder?+
Usually yes, up to 20% of qualified business income. Starting in 2026 there is also a $400 minimum deduction if you have at least $1,000 of QBI from a business you materially participate in. For consulting, law, finance and similar SSTBs, the deduction starts phasing out above $201,750 of taxable income ($403,500 joint) and is gone at $276,750 ($553,500 joint).
Can I deduct a home office?+
If you use part of your home regularly and exclusively for the business, the simplified method allows $5 per square foot up to 300 square feet, a maximum of $1,500.
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