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Did you know quarterly estimated taxes can actually help your business? While they can be extremely difficult to deal with as a new business owner, facing these routine 4-time-per-year tax payments can actually do a lot to improve your daily life.
However, this doesn’t help you if you don’t know how to do them correctly or even what quarterly estimated taxes (QETs) are in the first place. Let’s take a look at the basics of QETs and how they can be – bear with us now – your friend!
If you haven’t done one of these yet, it means you’re either new to business owning/freelancing or you’re in for a big surprise in April! QET’s are tax payments you send in to the government every few months so they don’t come after you or charge you big interest payments.
Remember how you would always have money taken out every paycheck at your salary or wage job? It was obnoxious but that money went to the government to help pay for stuff like roads and libraries. It wasn’t nearly as obnoxious to you since your employer dealt with all the paperwork and sending it in.
Now, though, you’re the employer, so you have to take care of everything. QETs are how you do this – you calculate how much money you owe on the income you’ve made and send in an estimated payment every few months. While these aren’t exact (hence “estimated”) any discrepancies are taken care of in April.
All you have to do is add up the income you’ve made over the taxable period, figure out how much taxes you would owe on it, divide by four, and send in the payment.
Need help calculating your QET’s? Outright Plus’s “Tax” tab will do all the math for you! As for sending in a payment, we recommend the EFTPS, the IRS ran website that lets you pay taxes quickly and easily to the government.
How They Can Help
Do you have issues with organization? Do you find yourself running all over the house trying to find a receipt or invoice you lost? Isn’t about time you got everything in order?
QETs more or less force you to keep your business paperwork in line. If you don’t, you’re going to continually run into so many problems it’s going to cause havoc with your business as a whole. It could even lead to you shutting your doors forever.
So take advantage of the fact you need to have your ducks in a row by getting a system in place to organize your life. We recommend using Outright for your business finances – it can immediately get your income and expenses in order so you can find everything when you need it. This includes tax times like QETs and federal taxes in April.
Speaking of April taxes, QET payments can give you a huge head start on federal payments. Since you’re already getting organized with Outright, you can work on practicing doing taxes with each QET payment. By the time April comes around you’ll practically be an expert and will have no problem getting everything done in time!
Picture Credit : Taxes