Tax planning
How to Pay Quarterly Taxes as a Small Business Owner
Learn how quarterly taxes work, when estimated tax payments are due, and how small business owners can avoid surprise tax bills.
Written by Matt Reese, CPA
What are quarterly estimated taxes?
If you own a business, freelance, or earn income without enough tax withholding, you may need to make quarterly estimated tax payments. Self-employed individuals generally file an annual income tax return and pay estimated taxes quarterly because they do not have an employer withholding income tax, Social Security, and Medicare taxes for them.
Quarterly taxes are not a separate type of tax. They are advance payments toward the income tax and self-employment tax you expect to owe for the year.
When are quarterly taxes due?
For federal estimated tax payments, the IRS uses four payment periods: January 1–March 31, April 1–May 31, June 1–August 31, and September 1–December 31. The typical federal due dates are April 15, June 15, September 15, and January 15 of the following year, though dates shift for weekends and holidays.
California follows the same general schedule for individuals. For calendar-year filers, the FTB due dates are April 15, June 15, September 15, and January 15 of the following year.
How do I calculate and pay quarterly taxes?
Most individuals use Form 1040-ES to calculate and pay federal estimated taxes, using the prior year return as a starting point. California taxpayers generally use Form 540-ES for state estimated payments.
A practical process looks like this:
- Estimate your business profit for the year.
- Add any other income — W-2 wages, investment income, spouse income.
- Estimate your federal income tax, self-employment tax, and California tax.
- Subtract tax already withheld from paychecks or other sources.
- Divide the remaining estimated balance into quarterly payments.
- Recalculate during the year if income changes.
What if my income changes during the year?
Many business owners do not earn income evenly throughout the year. If your profit increases, decreases, or comes in seasonally, your quarterly payments may need to be adjusted.
That is why bookkeeping matters. If your books are current, you can estimate tax based on actual profit instead of guessing from your bank balance.
The real goal
Quarterly taxes are one of the biggest surprises for new business owners. The goal is not just to pay on time — it is to know what is coming before it becomes a cash flow problem. A CPA can help you build a tax savings plan instead of relying on a generic percentage.
Frequently asked
Questions owners actually ask
- Do all business owners have to pay quarterly taxes?
- Not always. It depends on your expected tax liability, withholding, other income, and prior-year tax situation.
- Are quarterly taxes based on revenue or profit?
- They are generally based on taxable income, not gross revenue. For a business owner, that usually starts with business profit after deductible expenses.
- What happens if I miss a quarterly tax payment?
- You may owe penalties or interest, and you may need to catch up with a later payment.
Take the next step
Turn tax questions into a plan. Book a call or see how we work with operating business owners.
Educational content only.This article is for informational purposes and does not constitute tax, legal, or investment advice. Every owner’s facts are different; consult a qualified CPA and advisor before acting. Tax and accounting services are provided through Matt Reese, CPA; investment advisory services are provided through Measured Risk Portfolios, a registered investment adviser. Matt Reese, CPA and Measured Risk Portfolios are separate entities; clients are not required to engage both.