02.10.2026
Self-Employed in the US: Licenses, Taxes & Insurance 2026
You want to offer your services on FlyingServices and you live in the United States. So do you need a license? When do you owe taxes? And how do you get health insurance without an employer? Here is the overview with the official figures for 2026.
Sole proprietor, LLC — and which license?
Once you work for yourself, you are a sole proprietor by default. There's no federal registration. If you work under a business name instead of your own, file a "doing business as" (DBA) name with your county or state. An LLC is optional. It separates your business from your personal assets, but it doesn't change your taxes on its own.
What you do need depends on where you work and what you do:
- Local business license: many cities and counties require one, and some charge a local business tax. Check with your city hall.
- State occupational licenses: hair, beauty, massage, electrical and plumbing work, contracting, moving and child care are licensed by the state. Three examples:
- Texas: cutting or styling hair for pay requires a barber or cosmetology license. You may serve clients at their home only as a "digitally prearranged remote service", booked in advance through an app or website such as FlyingServices. If you also take bookings through your own website, app or social media, you must file a notice of intent with TDLR yourself. Coloring, bleaching and waxing are not allowed at the client's home.
- California: handyman work without a contractor license is allowed only up to $1,000 per job, including labor and materials. The job must not need a permit, you must not hire workers, and your ads must say you're not licensed.
- Massage therapy requires a license in 45 states plus DC.
Your tax ID. Clients and platforms ask for your taxpayer ID on Form W-9. You can use your Social Security number. Many people prefer an EIN, which is free and issued online by the IRS in minutes. Never pay a website for it. If you don't provide a correct ID, a payer has to hold back 24% (backup withholding).
Key numbers for 2026 at a glance
| What | 2026 |
|---|---|
| Self-employment tax | 15.3% on 92.35% of your net earnings, owed from $400 net |
| Social Security part of it applies up to | $184,500 of earnings |
| Standard deduction (single) | $16,100 |
| Federal income tax starts at | 10% on the first $12,400 of taxable income |
| Qualified business income deduction | 20%, and at least $400 if you have $1,000+ of business income |
| Business mileage | 72.5¢/mile (Jan–Jun), 76¢/mile (Jul–Dec) |
| Quarterly estimated taxes needed if you'll owe | $1,000 or more |
| "No tax on tips" deduction | up to $25,000 |
| Form 1099-K from payment platforms | over $20,000 and over 200 payments |
| Form 1099-NEC from a business client | $2,000 or more |
| States without income tax on wages | AK, FL, NH, NV, SD, TN, TX, WA, WY |
Self-employment tax: your Social Security and Medicare
As an employee, half of your Social Security and Medicare is paid by your employer. When you're self-employed, you pay both halves yourself. That's the self-employment tax: 12.4% for Social Security plus 2.9% for Medicare, on 92.35% of your net profit. It applies as soon as your net earnings reach $400, even if you owe no income tax.
The Social Security part stops at $184,500 of combined wages and self-employment earnings. Half of the self-employment tax is deductible on your income tax return. The good news is that these payments build your future Social Security benefits.
Income tax: what you actually pay
Your profit, not your revenue, is taxed: what clients paid minus your business expenses. Typical deductions are supplies and equipment, phone and software, insurance, platform fees and business miles. For miles you can take the IRS standard rate, which was raised mid-year for 2026: 72.5¢ per mile for January to June and 76¢ from July 1. Keep a mileage log.
After the standard deduction of $16,100 (single filers), federal income tax starts at 10% and rises through 12% (above $12,400) and 22% (above $50,400). On top of that comes the qualified business income (QBI) deduction. It lets you deduct up to 20% of your business income and is now permanent. New for 2026: if you have at least $1,000 of qualified business income from a business you actively run, the deduction is at least $400.
Side gig next to a job? Your profit is added on top of your salary and taxed at your top rate. Instead of quarterly payments, you can raise the withholding at your job with a new Form W-4.
State taxes come on top in most states. Nine states have no income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Some states also charge sales tax on certain services, so check with your state's revenue department.
Pay as you go: quarterly estimated taxes
No employer withholds tax for you. If you expect to owe $1,000 or more for 2026, pay estimated tax four times: April 15, June 15 and September 15, 2026, and January 15, 2027.
You avoid a penalty if you pay at least 90% of your 2026 tax or 100% of your 2025 tax. Use 110% of last year's tax if your 2025 AGI was over $150,000. Your 2026 return is due April 15, 2027. An extension gives you until October 15, 2027 to file, but not to pay.
No tax on tips: a real advantage for service providers
From 2025 through 2028 you can deduct up to $25,000 of tips per year from federal income tax, even as a self-employed provider. The deduction can't exceed your net profit from the business where you earned the tips. It shrinks once your income passes $150,000 ($300,000 for joint filers), and married couples must file jointly. Self-employment tax still applies to tips.
Many FlyingServices categories are on the IRS list of tipped occupations: home cleaning, home maintenance and repair, pet caretakers, tutors, massage therapists, barbers, hairstylists and cosmetologists, and home movers. For 2026, the IRS requires tips to be shown separately on the 1099 you receive, together with your occupation code. Keep a record of every tip.
Health insurance: the biggest question
Without an employer plan, you buy coverage on the ACA Marketplace (HealthCare.gov or your state's exchange). Important for 2026: the enhanced premium subsidies expired at the end of 2025. Subsidies are again limited to households earning up to 400% of the poverty level, so compare plans carefully.
Open enrollment for 2027 coverage on HealthCare.gov runs from November 1, 2026 to January 15, 2027. Sign up by December 15 if you want coverage from January 1. Your premiums are usually deductible as self-employed health insurance, up to your net profit. That doesn't apply in any month in which you or your spouse could join an employer-subsidized plan.
For retirement, a Solo 401(k) or a SEP IRA lets you save with tax-deductible contributions.
Transparency: what platforms report to the IRS
Payment platforms send you a Form 1099-K once you receive more than $20,000 in more than 200 payments in a year. Businesses that pay you $2,000 or more send a Form 1099-NEC. All income is taxable even if you never get a form. Keep invoices and records from day one.
Three examples
The figures below are rounded federal estimates for a single filer and include no health insurance.
Mobile hairstylist, full-time (Austin, Texas). You need a Texas cosmetology operator license; the TDLR notice for remote services only if you also book clients through your own website or app. Haircuts and styling at the client's home are fine when booked through FlyingServices; color and waxing stay in a salon or a licensed mobile unit. Out of $40,000 in revenue, $16,000 goes to products, tools and about 8,000 business miles, which leaves $24,000 profit. Self-employment tax is about $3,390. After the standard deduction and the QBI deduction, federal income tax comes to about $500, and Texas has no state income tax. The tips deduction can bring the income tax close to zero. The big item is self-employment tax, and that money goes toward Social Security and Medicare.
House cleaner next to a full-time job (San Diego, California, $6,000 profit). Cleaning needs no state contractor license. Check whether your city wants a business license or business tax registration; small repair jobs stay license-free only under $1,000 each. Self-employment tax is about $850. At a 22% top rate and after the QBI deduction, federal income tax adds about $980, plus California income tax at your top rate. Raise the withholding at your job instead of making quarterly payments. You'll likely get no 1099-K at this volume, but the income is still taxable.
Moving service with a box truck (Tampa, Florida, $58,000 revenue, $35,000 profit). Florida requires movers who work inside the state to register with FDACS before they start. That costs $600 per two-year period, and you need cargo coverage of at least $10,000 per shipment and vehicle liability insurance that depends on truck weight. Moves across state lines also need a USDOT number, household-goods operating authority from FMCSA, a BOC-3 filing, insurance filings and an arbitration program. Self-employment tax is about $4,950, federal income tax about $1,330, and Florida has no state income tax. Home movers are on the tipped-occupation list. Track your actual truck costs, such as fuel, insurance and repairs.
Our checklist for getting started
- Find out which licenses your city, county and state require for your service.
- Get a free EIN from the IRS and fill out Form W-9.
- Open a separate bank account for the business and keep every receipt and a mileage log.
- Set aside 25–30% of your profit for self-employment and income tax, and pay estimated taxes quarterly if you'll owe $1,000 or more.
- Sort out health insurance, and mark November 1 to January 15 in your calendar for open enrollment.
FlyingServices is coming to Austin, Texas. We're preparing our launch there and looking for the first providers: cleaners, mobile hairstylists, pet sitters, tutors, handymen and movers. Want to be one of them? Get in touch.
As of October 2026. All amounts apply to tax year 2026 and may change every year. This article is not tax or legal advice. The IRS, your state's revenue department and the licensing boards give binding answers, and a CPA or enrolled agent can help with your situation.
