Cue the pumpkin stands, trick-or-treating supplies, mannequins with sweaters, and the way-too-perfect apple-picking photos in your social media feed.
The calendar flipped to September and suddenly it’s fall … y’all. (Saw that one on a scrolling bank sign yesterday, so you know it must be true.)
For you, know that this is the beginning of the holiday cycle, which serves as a good reminder of things to prepare for in the coming months.
Like this…
If your Miami Metropolitan business has any type of beneficial ownership situation, the deadline for filing your BOI is coming up quickly. Not sure if you are a reporting company? Here’s how you know (as quoted directly from the BOI reporting FAQ page): “A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial BOI report.”
The rules are different if you created a business this year (2024) or start one after the deadline. They are:
- 2024: “90 calendar days to file after receiving actual or public notice that its creation or registration is effective.”
- 2025: “A reporting company created or registered on or after January 1, 2025, will have 30 calendar days to file after receiving actual or public notice that its creation or registration is effective.”
If you’re still unsure about the whole thing, we’re here for you at Heyer Inc.. And if you’d like some guidance on it so you’re really clear on things, grab a time on my calendar:
calendly.com/ralfheyer/30-minute-meeting
Something else you should be thinking about:
Estimated taxes for Q3 are due today, September 16th (as of this writing). These last two Q3 and Q4 tax payment deadlines seem to always be trickier for business owners, for whatever reason. Maybe it’s the busyness of summer vacations, back to school, and then the holidays later on that make it harder to remember.
Understanding and knowing how to pay estimated taxes is a nuisance for business owners across the board until you have a system in place or an accountant like me to track it all for you.
Which businesses are required to pay? How do I know if I need to make a payment? How much do I pay?
I have answers to all of these questions and more. Because with the right guidance, you can quickly cross this off your list and keep your cash flow fluid, by not paying too much, or doing the reverse, which ends up costing more.
So let’s make sure you’re doing this right.
How to Pay Estimated Taxes: Is Your Southeastern FL Business Doing This Right?
“A tax is a fine for doing well, a fine is a tax for doing poorly.” – Mark Twain
Before we talk about how to pay estimated taxes, let’s talk about who needs to pay them. Estimated taxes are quarterly payments made throughout the year to prepay your annual income tax liability.
For most businesses, these payments are due on April 15, June 15, September 15, and December 15 (though the IRS will push those dates back if they fall on a weekend or holiday like they did for the most recent deadline I mentioned).
Who needs to pay estimated taxes?
Generally, if you’re a business owner and you expect your annual tax liability to exceed 1K, you’re on the hook. That includes sole proprietors, partnerships, S corporations, and C corporations.
Though there are some exceptions:
- Certain corporations: Some corporations, such as tax-exempt organizations, are exempt.
- Farmers: Farmers have specific rules for estimated tax payments, and they may not be required to make payments if their income is relatively stable.
So, how do you determine your estimated tax payments?
It’s a bit more involved than simply guessing. This is where an active relationship with a qualified business tax preparer becomes your easy button.
Because how to pay estimated taxes does involve up-to-date data collection, math, and knowledge of applicable tax deductions and credits. Form 1040-ES should be used to calculate all of that together.
Simply put, you’ll need to calculate your expected annual taxes and then divide that amount by four. This will give you your quarterly estimated tax payment.
If you’re experiencing similar revenue to last year, then last year’s tax return can be a good guideline. We’re talking about your business income, wages, and other sources of income.
But also factor in any deductions or credits that may reduce your taxable income, such as the standard deduction, itemized deductions, or tax credits like the earned income tax credit or the child tax credit.
But what if your income fluctuates throughout the year?
In this case, you may need to adjust your payments accordingly. But that means you have to stay on top of your income and expenses to ensure you’re paying the correct amount each quarter.
What happens if you don’t pay on time?
Then you get to pay the IRS even more. If you don’t pay enough estimated taxes or don’t pay them on time, you may be subject to penalties:
- Late payment penalty: A penalty of 0.5 percent of the underpayment amount for each month or part of a month that the payment is late.
- Interest penalty: Interest is charged on the underpayment amount from the due date of the tax payment until it is paid in full.
And know that if you underpay your estimated taxes, you may need to file an amended return to correct the issue.
Where to pay them?
You can send estimated tax payments with Form 1040-ES by mail, but the easiest way is online. Use the IRS2Go app or go through your online account, where you can see your payment history and other tax records.
Are there any special rules to know about?
You already know the answer to this because we’re dealing with the IRS. Yes, particularly the “safe harbor” rules, which provide a simplified method for calculating estimated tax payments.
If you meet certain criteria, you may be able to avoid underpayment penalties by paying at least 90 percent of your current year’s tax liability or 100 percent of your prior year’s tax liability.
If you’re still unsure about how to pay estimated taxes for your Southeastern FL business or need personalized guidance, I’m here to help. I can provide you with tailored advice, answer your questions, and help you avoid those pesky penalties. Let’s work together to simplify your estimated tax process:
calendly.com/ralfheyer/30-minute-meeting
Your easy button for taxes,
Ralf Heyer