When you're an employee, taxes come out of every paycheck automatically. When you own the business, nobody's doing that for you — which is exactly why quarterly estimated taxes exist. Skip them, and the IRS doesn't just wait patiently until April; it charges an underpayment penalty for the gap.
Who actually has to pay them
Generally, if you expect to owe $1,000 or more in tax for the year after withholding and credits, you're expected to pay estimated taxes. That covers most sole proprietors, partners, and S-corp owners taking distributions on top of salary.
The four due dates
Estimated payments are due in mid-April, mid-June, mid-September, and mid-January of the following year — and despite the name, they're not evenly spaced quarters of the calendar. Missing any one of the four dates can trigger a penalty for that period specifically, even if you're on track for the year overall.
How to calculate what you owe
The most common approach is estimating your total tax liability for the year and dividing it into four payments, adjusting as the year goes if income changes meaningfully. A safe harbor rule also protects you from penalties if you pay at least 100% of last year's tax liability (110% if last year's income was higher), even if this year ends up owing more.
Where owners get caught off guard
- A strong Q1 or Q2 that isn't reflected in a bigger estimated payment later in the year.
- Switching to S-corp status without adjusting how estimated payments are calculated around salary versus distributions.
- Treating January's payment as optional because it falls after the calendar year ends — it's still required.
Our free quarterly tax calculator gives you a fast estimate for your next payment. If your structure is more complex — say you're weighing an LLC vs. S-corp decision — the calculation gets more nuanced, and it's worth getting right rather than guessing. S&C Bookkeeping calculates and tracks these for clients year-round, so nothing gets missed. Get in touch if you'd rather hand this one off entirely.