Understanding Quarterly Taxes: What Every Freelancer and Entrepreneur Needs to Know

As a freelancer or entrepreneur, you're in charge of your own financial destiny -- but that also means navigating tax obligations that can feel overwhelming. One of the most important responsibilities is paying quarterly taxes. Unlike traditional employees, who have taxes automatically withheld from their paychecks, self-employed individuals must estimate and pay their taxes to the IRS every quarter. This system ensures you're keeping up with your tax obligations throughout the year rather than facing one massic bill in April.

Quarterly taxes cover your income tax and self-employment tax, which includes Social Security and Medicare contributions. The IRS expects you to make these payments if you expect to owe more than $1,000 in taxes for the year. Payments are due on four specific dates: April 15, June 15, September 15, and January 15 of the following year. Missing these deadlines can result in penalties and interest, so it's crucial to stay on top of the schedule.

To calculate how much you owe, you'll need to estimate your income, deductions, and tax liability for the year. Tools like IRS Form 1040-ES can help you figure out your quarterly payments. Many freelances and entrepreneuers find it helpful to set aside a percentage of each payment they receive, typically 25-30%, to cover their tax obligations. Working with an accountant can also make this process smoother by providing accurate estimates and ensuring you're not over- or underpaying.

Staying organized is key to managing quarterly taxes. Keep detailed records of your income and expenses, as these will impact your deductions and ultimately reduce your tax liability. By staying proactive and informed, you can take control of your taxes and avoid unpleasant surprises come tax season. If you're new to quarterly taxes or need help getting started, reach out to us at Entacct Accounting. We can help guide you through the process to ensure you're meeting your obligations with confidence.

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