Estimated Quarterly Taxes: What They Are and How to Stay Ahead

If you're a small business owner, freelancer, or creative entrepreneur, you’ve likely heard about estimated quarterly taxes—but you may not be exactly sure what they are, when they’re due, or how to handle them without feeling overwhelmed. You're not alone. Many business owners feel confused (or surprised) when they realize that taxes aren’t automatically withheld from their income like they were in a 9-to-5 job.

Estimated taxes don’t have to be stressful. With the right systems and knowledge in place, you can plan ahead, avoid penalties, and feel confident come tax time. Let’s break it all down in plain English so you can stay on top of your tax game all year long.

What Are Estimated Quarterly Taxes?

Estimated quarterly taxes are payments you make to the IRS (and in many cases, your state) throughout the year to cover your income tax and self-employment tax. Unlike traditional employees who have taxes withheld from every paycheck, small business owners are responsible for setting aside and sending in those tax payments themselves.

The IRS wants you to “pay as you go,” meaning they expect you to estimate your income and send in taxes four times per year instead of waiting until April 15.

These payments generally cover:

• Income tax (based on your profit)

• Self-employment tax (covers Social Security and Medicare)

• Any state or local income tax that applies

Who Needs to Pay Estimated Taxes?

You likely need to pay estimated taxes if:

• You’re self-employed, a sole proprietor, freelancer, or own a small business (LLC, S-corp, etc.)

• You expect to owe at least $1,000 in taxes this year after subtracting any withholding or refundable credits

• Your business earns profit (revenue minus expenses), even if it’s part-time

If you’re unsure whether this applies to you, a quick rule of thumb is: if no one is withholding taxes from your income, you probably need to make estimated payments.

When Are Estimated Taxes Due?

The IRS splits the year into four quarters, but the due dates might not be what you'd expect. Here's the standard schedule:

• Q1: Income earned Jan 1–Mar 31 → payment due April 15

• Q2: Income earned Apr 1–May 31 → payment due June 15

• Q3: Income earned Jun 1–Aug 31 → payment due September 15

• Q4: Income earned Sep 1–Dec 31 → payment due January 15 of the following year

Mark these dates in your calendar or set reminders. Missing a deadline could result in penalties or interest, even if you pay your full tax bill later in the year.

How Do You Calculate What to Pay?

There are a few ways to figure out how much to send in:

1. Use last year’s tax return as a baseline.If your income and expenses are similar to last year, you can use your total tax owed from last year, divide it by four, and pay that amount each quarter.

2. Estimate based on your current income.If your income varies or you’re growing quickly, it’s better to calculate your quarterly payments based on your year-to-date profit. You’ll:

   • Add up your income so far this year

   • Subtract your business expenses

   • Estimate your profit for the full year

   • Multiply your estimated profit by roughly 25–30% (to cover federal income tax and self-employment tax)

3. Use accounting software or an accountant.Tools like QuickBooks or your tax professional can help you stay accurate and up to date.

   
   

How Do You Make a Payment?

You can send your estimated payments easily online:

• IRS: Use the IRS Direct Pay system or sign up for the Electronic Federal Tax Payment System (EFTPS).

• State taxes: Visit your state’s Department of Revenue website for payment options.

You’ll typically just need your Social Security Number or EIN and your bank information. It’s fast, free, and you’ll get an instant confirmation.

How to Stay Ahead of Quarterly Taxes

Here’s how to take the stress out of estimated taxes:

• Set aside money regularly.Each time you get paid, transfer 25–30% of your income into a separate tax savings account. That way, the money is there when you need it—and you’re not scrambling at the last minute.

• Use software to track your profit.Bookkeeping software makes it easier to calculate what you owe. If you keep your books up to date, estimating your quarterly payments takes just a few minutes.

• Create a recurring calendar reminder.Add all four tax due dates to your calendar with a reminder a week or two before. This gives you time to review your numbers and plan your payment without stress.

• Work with a tax professional.Especially if you’re new to self-employment or your income fluctuates, a CPA or enrolled agent can help you calculate your payments accurately—and avoid paying too much or too little.

  
  

The Bottom Line

Estimated quarterly taxes are a regular part of running a business, but they don’t have to be intimidating. With a little planning and organization, you can take control of your taxes, avoid costly surprises, and feel more confident managing your money.

By setting aside what you owe, tracking your income, and paying on time, you're doing more than staying compliant—you’re building a stronger financial foundation for your business. And that’s something worth celebrating every quarter.

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