Stop Overpaying in Taxes:
What Self-Employed Business Owners Need to Know About HSAs and the Time Value of Money to Stop Overpaying in Taxes.
If you’re self-employed and feel like you’re paying way too much in taxes—you’re not alone.
Running your own business comes with freedom, but it also brings more financial responsibility. You’ve probably wondered: Am I missing out on ways to save money on taxes? Are there strategies that could help me keep more of what I earn?
Here’s some good news: there are smart, simple strategies out there—and one of the most overlooked is the Health Savings Account (HSA).
Let’s break down how it works, how it can save you money, and how understanding the time value of money can multiply your financial gains over time.
What Is an HSA—and Can You Have One If You’re Self-Employed?
Yes! If you’re self-employed—whether you’re a freelance writer, Uber driver, online coach, or small business owner—you can have an HSA, if you’re covered by a qualifying High-Deductible Health Plan (HDHP).
An HSA is a tax-advantaged savings account that lets you set aside money to pay for qualified medical expenses—tax-free. You own the account, not your employer. That means you’re in control, so you stop overpaying in taxes.
2025 HDHP Requirements:
| Coverage | Minimum Deductible | Max Out-of-Pocket |
|---|---|---|
| Individual | $1,650 | $8,300 |
| Family | $3,300 | $16,600 |
These plans usually come with lower monthly premiums, but higher deductibles. That’s where the HSA steps in—to help cover costs before you meet your deductible.
How Do You Qualify for an HSA?
To open and contribute to an HSA, you must:
- Be covered by a qualified HDHP.
- Have no other health insurance (except dental, vision, or other excluded plans).
- Not be enrolled in Medicare.
- Not be a dependent on someone else’s tax return.
Also, if you’re self-employed and you have HDHP coverage by December 1, you can use the “last-month rule” to contribute for the full year.
Where Do You Open an HSA?
You can open an HSA through a:
- Bank or credit union
- Insurance company
- Online brokerage
Before opening an account, ask:
- Are there monthly fees?
- Can I invest the money?
- Are investment options and fees transparent?
- Will I get a debit card for easy spending?
Choose a provider that fits your business and personal needs.
2025 Contribution Limits for HSAs
| Coverage Type | Under 55 | Age 55+ (Includes $1,000 catch-up) |
|---|---|---|
| Individual | $4,300 | $5,300 |
| Family | $8,550 | $9,550 |
You can contribute up until the tax filing deadline for the previous year.
If you’re making after-tax contributions, you can deduct them on your tax return—reducing your taxable income.
Why an HSA Is a Smart Financial Move
- Contributions are tax-deductible
- Earnings grow tax-free
- Withdrawals for medical expenses are tax-free
- Funds roll over year after year—no “use it or lose it”
- You can invest your HSA funds just like a retirement account
Need to pay for acupuncture, x-rays, lab work, or birth control? Your HSA covers those and more. (Check IRS Publication 502 for a full list.)
The Time Value of Money: Why $100 Today Is Worth More Than $100 Tomorrow
Let’s zoom out for a moment.
If you put $100 in a savings account today and earn 5% interest, in one year you’ll have $105.
Now imagine you leave it there for 20 years. That $100 becomes $265.33 with compound interest.
If you add just $10/month to that account for 20 years, you’ll grow your money to $4,233.24—with only $2,500 of your own contributions. That’s $1,733.24 in growth.
On the flip side, borrowing $100 at 10% interest costs you $10 after one year. Because money has value over time—the sooner you invest or save it, the more you gain.
Make the Time Value of Money Work for You
As a business owner, every dollar matters. Understanding the time value of money can help you:
- Save smarter
- Plan better
- Maximize your profits
- Reduce your tax burden
The combination of a strategic savings account like an HSA and the power of compound interest can help you build real wealth—on your own terms, so you stop overpaying in taxes.
Ready to Keep More of What You Earn?
If you’re tired of overpaying in taxes or feel unsure about how to make your money work harder for you, I can help.
My Financial Freedom 1:1 Coaching Program is designed for self-employed entrepreneurs and small business owners who want:
- Better cash flow
- Tax-saving strategies
- Long-term financial clarity
📅 Click here to book a free call and see if we’re the right fit.
📩 Prefer to chat? 307-463-1159 me any time!
Don’t let money slip through your fingers—learn how to make it grow.
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