With tax season behind us, many small business owners are ready to move on and stop thinking about taxes for a while. But if you owed more than expected this year, received an underpayment penalty, or simply felt caught off guard, now is actually a great time to make adjustments—especially with the next estimated tax payment deadline approaching on June 15. Understanding estimated taxes for small business owners can help you avoid surprises later and stay proactive throughout the year.
Highlights
- Many small business owners are required to make quarterly estimated tax payments throughout the year.
- Missing or underpaying estimated tax payments can result in IRS penalties and unexpected tax bills.
- Reviewing your estimated tax payments now—before the June deadline—with the guidance of a tax professional can help you stay proactive and avoid surprises later.
For more guidance about proactive, smart post-tax-season strategies, read our article “What to Do After Tax Season: Next Steps for Individuals and Businesses.”
Estimated Taxes for Small Business Owners: What Are They?
Generally, estimated taxes for small business owners are quarterly payments made throughout the year toward their expected tax liability. This often applies to self-employed individuals and business owners.
Who Needs to Pay Estimated Taxes?
The IRS states that “people who are in business for themselves” (IRS 2026 Publication 505) will typically need to pay estimated taxes; this includes:
- Self-employed individuals, such as sole proprietors and independent contractors
- Partners
- S-corporation shareholders
- LLCs
- Others without withholdings
Basically, if you do not have enough income tax withheld, you may need to pay quarterly estimated taxes to make up the difference.
Why Estimated Taxes Matter
Overall, estimated taxes matter because, well, it’s the law. Failure to make large enough estimated tax payments could result in having to pay penalties.
On the bright side, making quarterly payments throughout the year also forces more proactive financial management and helps you to avoid unexpectedly large tax bills. Pivoting now rather than later can make a big difference for your business and your stress levels!
When Are Estimated Tax Payments Due?
Important: The next deadline, June 15, is approaching.
Below is the IRS’s general quarterly payment schedule:
- For January 1 to March 31 – Estimated payment due April 15
- April 1 to May 31 – Estimated payment due June 15
- June 1 to August 31 – Estimated payment due September 15
- September 1 to December 31 – Estimated payment due January 15 (of the next year)
When the payment due date falls on a weekend or legal holiday, the due date will be the next business day.
How Are Estimated Taxes Calculated?
Estimated tax payments are generally calculated based on your expected tax liability for the year, including but not limited to income taxes and self-employment taxes.
The IRS typically requires taxpayers to pay either:
- at least 90% of their current-year tax liability throughout the year, or
- 100% of the prior year’s total tax liability as a “safe harbor” amount.
Because of this, prior-year tax returns are often used as a starting point when estimating payments.
If your business income changes significantly throughout the year, your estimated payment amounts may also need to change.
Timing matters as well—unlike employee withholding, estimated tax payments are credited based on when they are actually paid. This means missed or late quarterly payments could still result in penalties, even if the total amount is eventually paid later in the year.
Calculating estimated tax payments can become complicated, especially for businesses with fluctuating income, multiple income sources, or S-corporation elections. Working with a tax professional can help you estimate appropriate payment amounts and adjust them throughout the year if needed.
At Grace & Growth Financial Services, estimated tax payment calculations are included as part of our tax return engagements to help clients stay proactive and avoid surprises later.
Common Mistakes Small Business Owners Make
When it comes to estimated tax payments, small business owners commonly misunderstand or fail to plan properly, including:
- Forgetting to save for taxes. This can lead to a huge stressor and a scramble for cash when the payments come due.
- Assuming that a tax refund means no estimated tax payments are needed. Alas, the IRS can still charge a penalty for failing to make quarterly tax payments, even if you anticipate receiving or do receive a tax refund.
- Not adjusting for income growth. For example, if your business’s income grows significantly throughout the year, you’ll likely need to adjust your estimated tax payment amounts rather than keeping those amounts the same.
For more mistakes to avoid, read our article, “Top 5 Common Financial Mistakes New Business Owners Make (And How to Avoid Them).”
How to Stay Ahead
One tip for staying proactive in this area is to have a separate savings account just for your estimated taxes (hopefully you’re already separating your business and personal bank accounts!); this can help prevent you from spending the money on other things until the time comes to make your tax payments.
Secondly, working with a tax professional can help you to stay ahead and have peace of mind in this area. They can help you calculate your estimated tax payments, remind you of upcoming deadlines, work with you to ensure no missed tax deductions, assist you with adjusting the size of your estimated payments if needed, and guide you in planning ahead for your business.
We recommend finding a professional with enough experience and expertise, one that you can review financials and discuss questions with more than once a year, and someone with the heart of a teacher who will help you to understand all of this as you walk through it together. If you’re unsure whether you should be making estimated tax payments or need help planning ahead, we’d be happy to help. Contact us today with your questions or to schedule a consultation. You can also sign up for our monthly newsletter to receive reminders about deadlines like estimated tax payment due dates.
