Summer is just around the corner, which means a lot of things are on the horizon… graduation parties, Father’s Day, and the end of Q2 for most businesses. Individual taxpayers can breathe a sigh of relief until next April. However, small business owners and those that are self-employed must remember that the Q2 estimated taxes deadline is coming up.
As a small business owner, you’re already aware of the many financial responsibilities you face every day. Everything from paying your employees, consistent bookkeeping, and filing your small business taxes will inevitably fall on your plate. Unless you want to deal with IRS fines in the future, it’s wise to stay on top of your quarterly tax payments.
If you’re a new small business owner, filing your taxes can be an intimidating process. However, the right strategy can put you on the right track for long-term success.
Read on for some simple guidelines for paying your Q2 estimated taxes.
When are Q2 estimated taxes due?
Q2 refers to the period between April 1 to May 31. Q2 estimated taxes are due June 15, 2022. Just as an individual must pay income tax, the IRS also requires small business owners to pay estimated tax.
The guidelines are a little more nuanced for business taxes. You can pay the estimated taxes on your income earned in the second quarter. Or, you can pay a quarter of your estimated final income tax for the year.
Beware that if you underpay your business taxes throughout the year, you may face a late penalty from the IRS on next year’s tax return. It’s best to keep track of these quarterly deadlines to avoid any future issues.
How do I pay my quarterly taxes?
Before you can calculate your Q2 estimated taxes, you’ll need to determine how much income you’re generating. A simple way to do this is to refer to IRS form 1040-ES. Use this form to input your expected income and deductions so you can calculate the final tax you’re expecting to pay in 2022. Your quarterly tax will be one-fourth of your final tax. Alternatively, corporations will need to use IRS form 1120-W to calculate estimated tax.
While most business owners would obviously prefer that their income increases every year, there are in fact some advantages to stability. If you expect your annual income for 2022 to be similar to last year, you can use this as the estimate on your tax form. Just follow the same calculation and pay one-fourth of that amount every quarter.
We know it can be stressful to estimate your income, especially when your business can change so rapidly. However, you don’t have to worry about underestimating your income, as this is unlikely to result in any penalties. In general, it’s a good idea to use your previous year’s total tax due. Furthermore, you shouldn’t have to pay additional quarterly payments or penalties after you’ve paid everything that was owed in the previous year.
Where to File Payments for Q2 Estimated Taxes
Now that you’ve calculated your Q2 estimated taxes, the next step is submitting your payment. The easiest way to pay your business taxes is through the secure IRS platform known as the Electronic Federal Tax Payment System (EFTPS). After enrolling through the site, you can schedule and file your payments directly, while also keeping track of previous filings.
To enroll on the site or by phone, you’ll need to provide your social security number or employer identification number. The IRS will then send you a secure PIN via mail.
The IRS also accepts direct payments online without the need for an account, but you’ll be responsible for recording the payments yourself.
Who needs to pay quarterly estimated taxes?
The popular idiom about the certainty of death and taxes rings true for all of us that work in the United States. Simply stated, if you earn income in the US, you need to pay federal income taxes throughout the year. However, not everyone must put in the same amount of effort to file those taxes. Employment terms vary and each person may not have to manage these payments themselves.
Many employees will choose to file IRS form W-4 with their employer. This is known as an employee’s withholding certificate and permits the employer to withhold some of their income on each paycheck. The employer is then expected to use those withholdings to pay the estimated taxes.
If you’re a self-employed business owner, you’ll need to pay these taxes yourself. Employers and independent contractors need to pay these quarterly estimated taxes and adhere to IRS deadlines.
The IRS also states that individuals in the following categories must pay estimated quarterly taxes:
· Corporations with total tax due that exceeds $500 when the return is filed
· Individuals, which include sole proprietors, partners, and S corporation shareholders who are expected to owe more than $1000 in taxes when the return is filed
Only those who haven’t had any tax liability during the previous full year will be exempt from paying estimated taxes.
2022 Quarterly Estimated Tax Payment Deadlines
We’re quickly approaching the deadline for Q2 estimated taxes, and it may help to review the last two of this year:
- Q1 Estimated tax deadline: April 15, 2022
- Q2 Estimated tax deadline: June 15, 2022
- Q3 Estimated tax deadline: September 15, 2022
- Q4 Estimated tax deadline: January 15, 2023
Keep in mind that January 15, 2023 falls on a Sunday, so your payment won’t be due until the next business day on Monday, January 16, 2023.
Don’t worry if you’ve already missed one of these deadlines. It’s still important to submit your estimated tax payment when you remember, even if you’re a few days or weeks past the deadline.
Get Your Small Business Taxes on Track with1-800Accountant
Managing the process of filing your small business taxes doesn’t have to be stressful if you’re proactive, stay organized, and have an experienced accountant on your side. The experts at 1-800Accountant can help you through the process and ensure you’re confident in meeting your requirements and reaching your goals.
Our team members dedicate themselves to helping small business owners understand how to manage their finances efficiently. Put your trust in 1-800Accountant and we’ll provide you with high-quality and stress-free service every time.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.