For small business owners, self-employed professionals, freelancers, and other similar businesses, keeping up with quarterly taxes can be a stressful event. Quarterly business taxes require accuracy, time, and efficiency for processing and submitting. It’s a big responsibility. If this is an area you struggle with in your business, know you are not alone.
The good news? With the right strategy and support, quarterlies don’t have to be such a huge burden. In this post, we will walk you through a complete survival guide for how to manage your quarterly taxes, things you should know to avoid surprise bills, and how we can help. Read more below.
Understanding Quarterly Taxes
You likely are already familiar with quarterly taxes. They’re designed to help you make prepayments on your income throughout the year, rather than in a huge lump sum at tax filing time. Business owners, freelancers, and other similar structures are required to pay these quarterly taxes as an estimate of what will be due when you file your taxes.
What do quarterlies cover? A few things, including these:
- Income tax based on your business profits
- Self-employment taxes (to cover Medicare and Social Security)
- State and local taxes
Many of these taxes will be unique to your situation. Some have specific calculations to follow. The quarterly payment amount is generally based on what you earned in the previous year or what you expect to earn in the upcoming year. The quarterly payment towards your potential taxes due will help avoid penalties at filing time.
Quarterly Tax Deadlines to Know
Each year, the deadlines for quarterly taxes and end-of-year filing are established at the beginning of the year. While there may be some slight variation to deadlines for holidays or weekends, they are usually very close to the 15th of the designated month.
These are the dates for 2025:
- April 15, 2025 (covers income earned January to March)
- June 16, 2025 (covers income earned April to May)
- September 15, 2025 (covers income earned June to August)
- January 15, 2026 (covers income earned September to December)
Keep in mind that these are quarterly estimated payments and they will not replace the need to file an official tax return by April 15th of every year, unless an extension is filed. If you miss a deadline, even by a day, you could be subject to penalties and interest until your quarterly payment is made.
Calculating Quarterly Tax Payments
It is best to work with a CPA to help determine quarterly business taxes that will be due based on your unique situation. If you have never paid quarterlies before and you want to estimate, here is a process to calculate estimated payments.
- Estimate your annual income for the year. You can use last year’s income as a reference for this number.
- Calculate your unique tax liability. You can use an IRS 1040-ES worksheet to help with this calculation, there are also online calculators or a CPA can help. As a rule of thumb, plan to set aside at least 25-30% of business income (not profit).
- Once you know the potential annual taxes due, you divide this into four payments and that is your quarterly amount.
While these calculations will help you get an estimated number, you will also want to ensure you have payment coupons to ensure your quarterly payments are properly allocated. If you are unsure about the calculations or how to send in payments, the IRS does provide instruction. However, having a CPA to support you through the process is a substantial help.
Pro Tips to Avoid Surprise Tax Bills
Nobody wants to get those surprise tax bills or be subjected to penalties and interest. Instead, you should be proactive and do your best to take steps to protect yourself from mistakes. One of the biggest mistakes that most professionals and business owners make is failing to save money on their earnings to pay taxes. Make it a habit to automatically set aside at least 25-30% of all business income to avoid this struggle.
Here are some additional tips to help.
- Plan and set aside money from all earnings
- Use a tax professional or reputable tax software for accuracy
- Make payments electronically rather than by mail
- Track expenses to take advantage of deductions
- Adjust payments if things change
There are common software solutions like QuickBooks and TurboTax that have user-friendly tools that can help calculate your estimates and even remind you of deadlines. A professional often handles the process for you or ensures you have the tools and reminders to take care of your payments.
Sending payments electronically is the best bet, and the IRS gives you multiple ways to pay. You can use a bank transfer, work through the EFTPS, which is a business tax system, or even make credit card payments. Electronic payments can help ensure the payment is recorded on time to prevent penalties.
Tracking business deductible expenses will help save some money. There are many different tax deductions that help reduce your taxable income, including internet/phone, office supplies, office equipment, home office expenses, business travel, and more.
What If I Don’t Pay Enough in Quarterly Business Taxes?
If you don’t make the quarterly estimated payment, that is when you can run into surprise bills from the IRS. However, if you are making the estimated quarterly payment and it’s not enough, you will pay any remaining balance due when you file your taxes.
Failing to make quarterly payments could cause challenging cash flow issues or lead to penalties and interest from the IRS, so do your best to be accurate and on time.
Get Quarterly Business Taxes Support with Us!
At Katherine M Johnson, CPA, we’re here to support small business owners so you don’t have to struggle through it. Our firm can help you plan and take care of your quarterly tax responsibilities and relieve you from that burden. You just have to plan for the funds to make the payments, and we can take it from there. Contact us today to get started!
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