This guest post is brought to you by Outright.com, the simplest way to manage your small business finances online!
We know you’re busy getting into the fall spirit, what with school starting and all the hustle and bustle of getting ready for the holiday season. However, we have to rain on your parade just for a minute – but we promise it’s for your benefit!
The next quarterly estimated tax payment is due fairly soon. In fact, it’s today September 17th! If you haven’t gotten your tax info ready to go, it's not too late. After all, the sooner you start, the more likely you’ll do everything correctly the first time around.
We understand it’s been a few months, though. Plus, some of you have never dealt with quarterly estimated taxes (QETs) before. Check out our little Q&A for a brief refresher course before you start organizing your forms.
What are “Quarterly Estimated Taxes” again?
QETs are tax payments you pay into the IRS. When you have a salary or wage job, taxes are automatically deducted by your employer in each paycheck. Since you’re an independent seller or freelancer, you don’t have these regular tax payments to take care of your obligations. Thus, you have to do it yourself.
What do I need?
Gather all the financial information you can regarding your business. You’ll want all your receipts, invoices, expenses, the works. At the most basic you want records of all the money you made as this is what the IRS will really be interested in. However, for your sake you’ll also want records of how much you spent (supplies, taxable bills, etc.) so your tax liability is less.
What do I do?
First grab Form 1040-ES so you can fill it out. Now you must calculate how much you made with your business since the last tax period. You can do this one of two ways: figure out how much you made since your last tax payment, which should have been in June, or calculate expected amounts for the year and divide by four.
After this you want to calculate how much expense you put into your business. Anything from supplies, to travel expenses, to a percentage of utilities you use to power your home office, and even past tax prep expenses can be used to bring down how much you owe to Uncle Sam.
If it’s all too confusing, Outright has a handy tax calculator you can use!
Where do I pay?
The instructions for Form 1040-ES tell you where to send your payment depending on the state where you live. However, you can also pay online, which is much handier! Simply go to the Electronic Federal Tax Payment System website and submit your payment through their system. There’s even a phone option – just call 1-800-555-3453 and they’ll walk you through it.
Now you’re all done…at least until January when the next payment is due!
This post was brought to you by Outright.com, the simplest way to manage your business finances online!