Learn how to pay quarterly taxes for small business owners. Calculate payments, avoid penalties, and stay compliant with our complete 2025 guide.
Bookkeeping, tax prep, and financial strategy for growing small businesses.
By Nathan Hodgens | LedgerFi Small Business Advisor
Learning how to pay quarterly taxes doesn't have to feel overwhelming. Our team brings 45 years of combined experience helping small businesses with quarterly tax compliance, and before your eyes glaze over thinking this is too complicated – it's not. We've helped contractors, consultants, and business owners just like you navigate this exact situation many times.
Here's what you need to know: quarterly tax payments aren't optional when you owe $1,000 or more in federal income taxes. Whether you're self-employed, running a small business, or earning income without sufficient withholdings, the IRS expects you to pay as you earn.
What you'll learn in this guide:
The IRS makes the rules clear, but understanding how they apply to your specific business situation requires careful analysis. Three key factors determine whether paying taxes quarterly becomes mandatory for your situation.
You must make quarterly estimated tax payments if you expect to owe $1,000 or more in taxes after withholdings and credits. This requirement affects several types of business owners and income earners.
Who needs to start paying quarterly taxes:
Corporations face a lower threshold at $500 or more when filing their return. The IRS also requires quarterly payments when your withholding and refundable credits fall short of either 90% of your current year tax liability or 100% of your prior year tax shown on return.
Our team commonly sees business owners relying on a bookkeeper to handle their quarterly tax payments. This creates a critical fault in the system because the business owner often doesn't have visibility into what has actually been filed or paid. One general contractor we worked with lost their IRS resolution agreement when they failed to make quarterly payments, costing them $100,000 in negotiated savings that our partner company had secured.
Some business owners can skip quarterly payments entirely. You're exempt for 2025 if all three conditions apply:
No tax owed last year typically means you won't need quarterly payments this year. You can also avoid quarterly payments through increased withholding by completing a new Form W-4 with your employer and requesting additional tax withholding from your paycheck.
Higher-income taxpayers face tougher requirements for paying quarterly taxes for small business success. If your adjusted gross income exceeded $150,000 in 2024 ($75,000 if married filing separately), you must pay 110% of your prior year tax instead of 100%.
This means covering 110% of your 2024 tax liability through withholding and estimated payments to avoid penalties. Farmers and fishermen get different rules when two-thirds of gross income comes from these activities.
Calculating your quarterly tax obligation doesn't require advanced mathematics when you understand the systematic approach. The IRS provides several straightforward methods to determine your payments without guesswork.
Last year's tax return becomes your roadmap for this year's payments. The IRS calls this approach "safe harbor" because it protects you from penalties when properly executed.
Start with these baseline calculations:
This method works best when your income stays relatively consistent year to year. If you expect major changes to your income or deductions, you'll need to adjust your estimates accordingly during your regular coaching sessions.
Estimating your current year tax bill means looking ahead at both income and deductions. You won't need perfect precision to get close enough for safe harbor protection:
Step-by-step calculation process:
Your estimates will change throughout the year. We recommend completing another calculation to recalculate your estimated tax for upcoming quarters when your projections shift significantly.
The IRS offers three "safe harbor" methods to help you avoid underpayment penalties. Each method fits different financial situations:
The 90% Method: Pay at least 90% of your current year's tax liability through quarterly payments and withholding. This works well when you expect significantly lower income this year compared to last.
The 100% Method: Pay 100% of your previous year's tax liability, divided into four equal payments. If you owed $5,000 last year, you'd pay $1,250 each quarter this year. This straightforward method works best for stable income situations.
The 110% Method: Higher-income taxpayers face this requirement. If your adjusted gross income exceeded $150,000 on your previous return, you must pay 110% of last year's tax liability for safe harbor protection.
While most advisors recommend sticking with standard percentage calculations, our team's 45 years of combined experience shows that automating the filing system through partnerships with payroll providers creates better compliance outcomes. We work with our partner network to ensure business owners get rates not available on the marketplace while maintaining automated compliance.
Federal quarterly taxes follow the IRS's unique schedule that doesn't match calendar quarters. Understanding these specific deadlines prevents costly penalties and keeps your business compliant throughout the year.
Your first payment covers January through March income. This date doubles as the prior year's filing deadline, making April 15 particularly important for comprehensive tax planning. Self-employed individuals, retirees, and investors need this payment submitted on time to stay current with tax obligations.
Business owners should plan their cash flow around this deadline since it represents both backward-looking compliance (previous year's return) and forward-looking planning (current year's first quarter).
Just two months later, your second payment covers April and May income. The usual June 15 deadline shifts to June 16 because of weekend scheduling. This compressed timeline catches business owners off guard, especially those with irregular income patterns.
We helped one business owner in the educational products field pay less in quarterly taxes this year because their income was lower, significantly improving their cash flow during this critical period.
Your third payment covers the longest period—June through August. Summer income gets settled in autumn, so setting aside funds throughout these busy months requires careful cash flow planning. This three-month span demands more strategic preparation than the shorter second quarter.
Your final 2025 payment covers September through December income. You'll pay this in the following calendar year, which affects year-end financial planning. File your 2025 return by March 2, 2026, and you can skip this payment entirely by settling everything at filing time.
Important note about payroll vs. estimated taxes: It's crucial to understand that quarterly payroll taxes differ completely from quarterly estimated taxes. We work with payroll providers to ensure business owners are set up correctly for payroll tax compliance, which operates on a separate schedule from estimated tax payments.
Once you've calculated what you owe, choosing the right payment method can streamline your quarterly tax compliance and prevent processing delays or errors.
The Electronic Federal Tax Payment System (EFTPS) gives you direct access to the IRS with no fees. You can track your payment history and submit payments quickly with complete documentation. IRS Direct Pay works even simpler—no registration required, payments come straight from your bank account.
Credit card payments cost extra through IRS-approved processors, but many business owners find the convenience worth the fee for cash flow management. Business owners can handle most tax payments through their business tax account or Direct Pay system.
Check payments still work if that's your preference, though they offer the least security and tracking capability. Mail your check with Form 1040-ES to the address for your state. You get a paper trail, but processing takes longer than electronic methods.
Send only the payment voucher with your check—keep the worksheet for your records and future calculations.
We look for opportunities to automate reminders and payments for business owners through their banking systems and accounting software. This prevents missed deadlines while maintaining the visibility that bookkeeper-managed systems often lack.
Our team provides strategic guidance during regular coaching sessions to determine when to pay quarterly taxes, and we recommend setting up automated payments in banking systems to ensure deadlines aren't missed.
Quarterly tax mistakes aren't just embarrassing—they're expensive. The IRS charges penalties that add up faster than most business owners expect, but understanding the risks helps you avoid them.
Underpaying estimated taxes tops every mistake list we encounter in our coaching sessions. You need 90% of current year tax or 100% of last year's tax (110% if your AGI exceeded $150,000). Missing deadlines, miscalculating self-employment tax, and failing to adjust when income changes round out the most costly errors.
The penalty for late or insufficient quarterly payments can reach 0.5% of unpaid taxes per month, capping at 25%. For a business owner owing $10,000 in quarterly taxes, this could mean $500+ in avoidable penalties over just a few months.
You should hire a professional who is credentialed by the IRS to handle quarterly tax compliance if you want genuine peace of mind. A business owner can handle this independently, but they expose themselves to unnecessary risk without proper guidance and oversight.
Our licensed tax professionals provide quarterly tax guidance as part of our comprehensive services. During coaching meetings with our bookkeeping clients, we address quarterly tax requirements and ensure proper compliance throughout the year.
Discovered an underpayment? Don't wait for it to compound. Use Form 2210 to check if you actually owe a penalty. The IRS sometimes waives penalties for natural disasters, unusual circumstances, retirement after age 62, disability during the tax year, or first-time penalty abatement for clean compliance history.
We leverage our partnership network to ensure as much of the technical compliance is automated for peace of mind, reducing the likelihood of underpayment situations.
Paying quarterly taxes for small business owners works best when you integrate it into your overall financial planning and compliance strategy. Success comes from systematic preparation, not last-minute scrambling.
We evaluate quarterly taxes as part of both business and individual tax planning, ensuring a comprehensive review of how to optimize your entire tax situation. This approach identifies opportunities for penalty avoidance, peace of mind, and strategic cash flow planning throughout the year.
Unlike traditional accounting firms that focus solely on compliance, our comprehensive approach includes automated systems, strategic guidance, and year-round support that keeps you ahead of requirements rather than reactive to deadlines.
Business owners should discuss quarterly tax planning during regular coaching sessions to determine optimal payment timing and amounts. We recommend this schedule:
Monthly coaching integration: Review quarterly tax obligations and opportunities during regular meetings, ensuring you're never caught off guard by upcoming deadlines or changing income patterns.
Automated payment setup: Establish banking system automation that handles payments on schedule while maintaining your visibility into what's being paid and when.
Mid-quarter reviews: Assess income changes that might require payment adjustments for upcoming quarters, preventing over or underpayment situations.
Many traditional firms don't leverage technology to make the quarterly tax process automated, efficient, on-time, simple, and accurate. Our systematic approach ensures business owners pay what they need to—not more or less—while maintaining complete visibility into their compliance status.
Through our tax savings strategy sessions, we help clients understand quarterly tax optimization as part of their broader business financial strategy, creating long-term value beyond basic compliance.
One of the biggest misconceptions we encounter is that quarterly taxes aren't important or that they're optional for small business owners. They tend to be a black box for many business owners who don't know what to do or how to handle them properly.
Reality check: Quarterly taxes are mandatory when you meet the income thresholds, and the penalties for non-compliance can be severe. The key is understanding your obligations and having systems in place to meet them consistently.
Professional vs. DIY decision: While you can handle quarterly taxes independently, the risk of mistakes often outweighs the cost of professional guidance, especially when that guidance is integrated into comprehensive bookkeeping and coaching services.
Quarterly tax compliance affects your business's financial future and peace of mind throughout the year. Our team of licensed Enrolled Agents specializes in quarterly tax guidance through strategic coaching and comprehensive support.
Our quarterly tax support includes:
You focus on growing your business, we'll help you understand quarterly tax requirements through our comprehensive approach.
Contact LedgerFi today to discuss how our tax professionals can help you understand quarterly tax requirements during your coaching sessions.
See our pricing page for complete service details.
Licensed Enrolled Agents serving businesses across all 50 states
Disclaimer: This article provides general information about quarterly tax requirements and should not be considered as tax advice for your specific situation. Tax laws are complex and change frequently. Always consult with qualified tax professionals for guidance specific to your business circumstances
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