Why April is not the whole story
When you work for an employer, taxes come out of every paycheck. When you work for yourself, no one does that for you. The IRS still wants its share throughout the year — so it asks you to estimate what you will owe and pay it in four installments. Miss them, and you can face penalties even if you pay in full later.
Who needs to pay
If you expect to owe at least $1,000 in federal tax for the year after subtracting any withholding, you generally need to make estimated payments. That covers most sole proprietors, freelancers, single-member LLCs, partners, and S-corporation shareholders. If your business is new and profitable, assume it applies to you until we confirm otherwise.
The four due dates
Estimated taxes are due four times a year: in mid-April, mid-June, mid-September, and mid-January of the following year. The periods are not evenly spaced, which surprises people. Mark them on your calendar the day you open for business.
How to figure out what to pay
There are two common approaches. The first is to pay 100% of last year’s tax — 110% if your income is higher — split into four. This is the “safe harbor”: pay it, and you avoid penalties no matter what this year brings. The second is to estimate this year’s income and pay as you go. Growing businesses often use a mix: safe harbor to stay protected, adjusted upward when a big month lands.
Do not forget your state
Pennsylvania and most states have their own estimated payments, with their own forms and deadlines. It is easy to handle the federal side and forget the state one. We track both, so nothing slips through.
A simpler way to handle it
The cleanest system we set up for clients is simple: open a separate savings account, move a fixed share of every deposit into it — often 25 to 30 percent — and pay your estimates from that account. You never feel the payment, because the money was never yours to spend. When the due date comes, the cash is already waiting.