Quarterly Taxes: How to Calculate, Save, and Pay Without Panic
Quarterly Taxes: How to Calculate, Save, and Pay Without Panic
If you’re self-employed or run a small business, quarterly taxes are part of the deal—yet most owners don’t fully understand how they work. And honestly, the IRS doesn’t make it intuitive.
Good news: quarterly taxes don’t have to be stressful or surprising.
With the right system, they become predictable and manageable.
Below is a clear, no-nonsense method to calculate your estimated taxes, save for them consistently, and pay them on time—without scrambling every quarter.
1. Understand What Quarterly Taxes Actually Are
Quarterly taxes (estimated taxes) are payments you make to the IRS four times per year:
April 15
June 15
September 15
January 15
The purpose is simple: the IRS expects you to pay taxes as you earn income—not once a year.
Who needs to pay?
Generally, anyone expecting to owe $1,000 or more in taxes for the year who doesn’t have taxes withheld from a paycheck.
This includes:
freelancers
LLC owners
contractors
side-hustlers
business owners with profit
anyone paid on 1099
S-Corp owners (for non-payroll income)
2. A Simple Way to Estimate What You Owe
You don’t need complex formulas.
Use this practical rule of thumb:
Set aside 20–30% of your profit.
Lower income / high deductions: ~20%
Higher income / few deductions: ~25–30%
Profit, not revenue, is the key number.
Profit = Revenue – Expenses.
If you made $8,000 in profit this month:
20% savings = $1,600
25% savings = $2,000
30% savings = $2,400
This method keeps you ahead of the IRS instead of behind.
3. Make a Habit of Saving From Each Deposit
Business owners get in trouble when they wait until quarter-end to gather cash.
Instead:
Set aside a percentage from every deposit
Move it into a separate tax savings account
Avoid mixing it with operating expenses
Treat it as “untouchable”
This ensures January, April, June, and September don’t hit your cash flow like a brick.
4. What About S-Corp Owners?
If you’re an S-Corp owner taking payroll:
Your W-2 salary includes tax withholding
Your distribution income does not
You may still owe estimated taxes on the non-salary portion
A simple method:
Use your accountant or payroll system to estimate whether withholding is covering enough.
If not—quarterly payments make up the difference.
5. How to Actually Make the Payments
The IRS prefers online payments. Here are the options:
IRS Direct Pay
Uses your bank account (free).
https://www.irs.gov/payments/direct-pay
EFTPS (Electronic Federal Tax Payment System)
Good for recurring payments.
QuickBooks or tax software
Some allow direct quarterly payment scheduling.
State quarterly taxes
Don’t forget your state may require its own payments.
6. Signs You Need Professional Help
Quarterly taxes get more complicated when:
income fluctuates dramatically
you have employees
you file as an S-Corp
you have multiple businesses
you receive multiple 1099s
you’re behind on previous estimates
If you’re unsure whether your estimates are high, low, or on track, an accountant can help you avoid underpayment penalties—or paying more than necessary.
Final Thoughts
Quarterly taxes can be completely manageable once you set up a simple rhythm: calculate a percentage of your profit, save as you go, and pay on time. With the right system, you can avoid stress, surprises, and last-minute scrambles.
This isn’t tax advice—every business is different. Always consult a qualified professional for guidance tailored to your situation.
If you want help calculating your quarterly tax amounts or setting up a predictable savings system, schedule a quick call and let's see how we can work together.
The Money-Smart Business Blog provides educational content designed to help small business owners make informed decisions. This content is not tax, legal, or financial advice and should not be used as a substitute for personalized guidance. Always consult with a licensed professional before taking action based on this information.
