The rudest surprise in self-employment isn't the workload - it's discovering that nobody has been withholding your taxes, and the IRS expects to hear from you four times a year, not one.
The two taxes you're paying now
Who has to pay quarterly
Generally, if you expect to owe $1,000 or more in tax for the year, the IRS expects estimated payments through the year rather than one payment in April. The quarterly due dates are April 15, June 15, September 15, and January 15 (of the following year) - note the uneven spacing; "quarterly" is approximate.
The simple system that prevents the panic
- Skim a fixed percentage of every payment into a separate tax account the day it arrives. Common starting range is 25–30% of net income, tuned by your accountant to your bracket and state.
- Track expenses as they happen - deductible costs reduce your net earnings, and net earnings are what all these taxes are computed on. A shoebox of receipts in April undercounts, always.
- Calendar the four deadlines with a one-week warning each.
- Pay online via IRS Direct Pay or EFTPS - takes minutes.
Why underpaying costs extra
Miss or underpay the quarterlies and the IRS can add an underpayment penalty even if you settle in full at filing time. Safe-harbor rules (paying at least a set percentage of last year's tax) can protect you - a topic worth ten minutes with a professional.
Know your numbers at tax time
Ivy tracks revenue and deductible expenses all year and exports a Schedule-C-ready summary your accountant will love.
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