Who Files Quarterly Taxes
Tax Season is rapidly approaching; time to get out those calculators! If you’re running a business, even a small one, then it’s likely you may have to pay quarterly taxes. A lot of people believe that the size or type of business determines whether you pay quarterly taxes, but this is a misconception that costs companies a lot of money.
While there are some exemptions, if you must pay over $1000 in taxes for your business, the IRS will expect you to pay estimated quarterly taxes. Failing to do so can result in fines and interest that will severely impact your business’s success. The type of business can impact the kinds of taxes you pay, potentially lowering your tax threshold bellow the exemption line, but trying to keep below that threshold will stunt business growth and still may not keep you from owing quarterly taxes. It’s therefore best to plan on quarterly taxes.
Advantage of Paying Quarterly Taxes
While paying quarterly taxes can sometimes feel stressful, there are some advantages. For one, it will keep you focused on your finances if you are calculating them on a quarterly basis. With a better grasp of your cash flow, you can make better decisions about how to spend money for your business. This is why Stapley Advisory and Accounting who help with accounting services in Logan suggests calculating your taxes on a quarterly basis even if you don’t need to pay them.
When In Doubt, Overestimate
Quarterly taxes are estimated, so it’s not always easy to know how much you’ll owe. Something to keep in mind is that you will get refunds for quarterly taxes just the same as annual taxes if you pay more than you owe. For this reason, it’s a good idea to overestimate how much you owe and pay more rather than pay less. If you underestimate and pay less than you owe, it will result in fines, but any excess you spend will result in the money coming back to you. That’s always a better situation.
Don’t Count on Extensions
When it comes to quarterly taxes, the IRS rarely grants extensions. While you may receive an extension on the paperwork, since there’s barely any paperwork involved on quarterly taxes, this doesn’t amount to much. The deadline remains unchanged either way and you will be expected to pay even with an extension. Although some major unforeseen events can earn an extension, generally, it’s better to avoid extensions anyway. It’s very easy to fall into the trap of procrastinating your paperwork and ending up needing to do a lot more work all at once when the extension finally expires.
To DIY, or Not To DIY
Some people like to do things themselves. When it comes to quarterly taxes, the best advice for people who want to take the DIY route, the best advice is to get yourself some good tax accounting software. There are plenty of options to choose from, depending on the needs of your company.
However, if you aren’t an expert in accounting, doing it yourself might not be the best option. There are so many ins and outs to it, which change from year to year based on new laws that get passed or repealed. It can be hard to keep track of it all. Hiring a professional tax accountant will take the worry out of the equation. As long as you can keep your records straight, the tax accountant can keep everything else in order for you, letting you focus on running your business. If you can afford it, it’s even possible for the accountant to handle all the records for you.
Don’t Miss Your Deadlines
The deadlines for quarterly taxes tend to fall on the 15th or 16th of the relevant month. The months in which quarterly taxes are owed are January, April, June (note, the second quarter is two months instead of three), and September. Making your payments is critical to avoid trouble with the IRS.
With one of those deadlines coming up, and it being the annual tax due date to boot, now’s the time to get on it if you haven’t already. The longer you delay, the more stress you’ll face, so don’t put it off until the last minute.
