Working for yourself has so many great benefits. The freedom of being a business owner cannot be understated. But, of course, there’s some trade-offs.
I wouldn’t trade the ability to work in my pajamas for anything. But, the added responsibility of owning a business is not for the faint of heart. The implications of missed tax deadlines fall directly on you. The consequences of missing deadlines come right out of your pocket!
Here’s what you need to know about Quarterly Estimated Tax Payments and why you need to pay on time…
What is estimated tax?
- The method to pay tax on income that is not subject to withholding paid quarterly
- Since you aren’t an employee who has the luxury of having taxes withheld from each paycheck, it’s your responsibility to make estimated tax payments to cover your net earnings each quarter.
Who needs to pay estimated tax?
YOU! If you are a sole proprietor, independent contractor, partner, S corporation shareholder/owner, or a self-employed individual
What happens if I don’t make Quarterly Estimated Payments?
Making Quarterly Estimated Payments correctly will save you money and a headache! If you do not pay enough tax throughout the year, you will have to pay a penalty. No matter how big or small the penalty is, no one wants to pay extra.
More importantly, if you do not pay enough tax by each quarterly due date, you may be charged a penalty. The penalty still applies EVEN IF you are due a refund when you file your tax returns. That means money out of your pocket that could easily be avoided!
When Are Quarterly Tax Payments Due?
Estimated tax payments are due as follows:
- First Quarter: April 15
- Second Quarter: June 15
- Third Quarter: September 15
- Fourth Quarter: January 15 of the following year. Since the 15th is the weekend, then you get until Monday to pay!
How much do I owe?
Now that you have the basics of the who, what, when, and why… let’s get you calculating! Check out my FREE 1-Minute Quarterly Tax Payment Calculator to get started on making those payments on time and keeping money in your pocket! This is a tool you can pull out and use each quarter to take the guesswork and time out of figuring out how much taxes to pay each quarter.
Your process of calculating your quarterly taxes will never be easier.
Download your Quarterly Tax Payment Calculator today.
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