As a small business owner or freelancer, mastering your quarterly taxes is a key part of running a successful company. For many who aren’t used to doing so, this may require a shift in your mindset, since you probably think of taxes as something you do once a year. But the good news is that paying taxes quarterly allows you to spread your tax responsibilities over the year and avoid a disruption to your cash flow come tax time. Here’s a closer look at how quarterly taxes work and what you need to know when filing your tax returns.
What Is a Quarterly Estimated Tax?
Most people who are employed have taxes withheld from their paycheck each pay period, typically federal income tax, Medicare, and Social Security. However, people who are independent contractors and receive a 1099 (instead of a W-2) and self-employed people typically don’t have taxes withheld from their pay, and it is their responsibility to pay taxes on their income.
Paying quarterly often reduces your tax burden at the end of the year, preventing you from getting hit with a massive bill, but even if you prefer to wait and pay in one sum, you can’t. Paying quarterly taxes is required for nearly all self-employed people and businesses and failing to do so often comes with penalties.
How Do Individuals Pay Quarterly Taxes?
To pay your quarterly taxes, you need to fill out Form 1040-ES. You’ll see it’s not too different from the standard 1040 filled out when you do your annual tax preparation. Once the form is filled out, you submit it with your payment voucher and your payment and send in a check or money order to the Internal Revenue Service.
There are some exceptions to paying quarterly estimated taxes, such as if your taxable income is under a specific amount. A CPA, such as Goldin Group, can help you determine if you are required to pay.
Quarterly Taxes for Small Businesses in Maryland
If you own a sole proprietorship or a limited liability company (an LLC), either alone or with a partner, this is considered a “pass-through” business, meaning any profits or losses of the business are personal gains or losses for the individual. The profits are reported on your personal taxes, rather than the LLC itself paying income tax. Because of this, just like independent contractors, you are responsible for paying quarterly taxes on your share of any profits.
Corporations also have to file and pay quarterly taxes, but unlike personal taxes paid by independent contractors and owners of sole proprietorships, partnerships, and LLCs, the corporation files IRS form 1120-W.
Quarterly Estimated Tax Payment Dates in 2019
If you are required to file and pay quarterly taxes, they must be paid to the IRS four times each year by specific deadlines. For 2019, the remaining deadlines to pay are:
- June 17, 2019 for income received in April, May, and June
- September 16, 2019 for income received in July, August, and September
- January 15, 2020 for income received in October, November, and December
Failure to pay your estimated taxes on time or not paying enough can come with steep penalties. However, there’s not a set amount, the penalty varies depending on the tax owed and how late the payment is.
Contact Our Small Business Accountants for Help with Quarterly Taxes
At Goldin Group LLC, we understand that as a self-employed person or business owner, keeping up with taxes is time-consuming and can even be overwhelming. That’s where we can help! We work with individuals and businesses in Maryland (DC Metro Area), offering a variety of financial services designed to save you time and lower your tax burden. If you are a small business that is looking to outsource your accounting or if you need help managing any aspect of your business’s or nonprofit’s finances, we want to hear from you. Call us at (301) 913-0008 or email email@example.com to make an appointment.