As a business owner, you have probably heard of the term “estimated quarterly tax payments.” Depending on the type of business you own and how much money you make, you may be required to do this.
Not only is this the law, but it’s also to your benefit. Here’s what you should know:
What are estimated quarterly tax payments?
When you work as an independent contractor or business owner, you are responsible for making your quarterly tax payments. These are payments that taxpayers make to the IRS throughout the year, rather than waiting to pay their taxes in full when they file their returns.
If you pay too little in taxes throughout the year, you may owe the IRS money when you file your return. On the other hand, paying too much in taxes entitles you to a refund from the IRS. However, it’s important to note that overpaying your taxes is not ideal because you essentially give the government an interest-free loan.
There are several good reasons for making quarterly tax payments. It helps to ensure that you will have the money available when you file your taxes at the end of the year. It can also help you avoid interest and penalties on late payments. If you wait until April 15 to pay your taxes, you may be charged interest on any unpaid tax balance.
Quarterly tax payments can also give you greater control over your finances, as you can see exactly how much money you are setting aside for taxes each quarter. It’s an excellent way to stay organized and on top of your taxes.
Working with someone who understands the complexities of estimated quarterly taxes can save you time and frustration. If your business taxes have gotten away from you, don’t hesitate to seek some assistance.