When you’re self-employed or run a business, there’s no steady paycheck with taxes already taken out. It’s also possible you have no HR department reminding you that it’s time to file. Instead, it’s you, your income, and that nagging voice asking, “Am I saving enough for taxes?”
If you’ve ever scrambled in April—or worse, been surprised by a penalty letter from the IRS—you’re not alone. The good news is this: you can take the guesswork out of quarterly tax payments. With a few smart moves, you can build a system that keeps you on track year-round, avoids surprises, and lets you focus on your business with confidence.
Here’s how to stop guessing and start planning when it comes to paying your quarterly taxes.
Why Quarterly Tax Payments Matter—And What Happens If You Skip Them
The IRS expects most self-employed individuals to pay taxes four times a year—April, June, September and January. These estimated tax payments cover your income tax and self-employment tax (which is a combination of Social Security and Medicare tax).
If you don’t pay enough throughout the year, the IRS can hit you with underpayment penalties, even if you pay everything by the April deadline. That’s because they want their cut as you earn, not after the fact.
Even more important, not tracking the amount you owe could lead to a large bill in April, one that you cannot afford.
This isn’t just about big tax bills, though. It’s about stress. Falling behind—even just once—can throw off your cash flow, put pressure on future income, and make tax season feel like a looming threat instead of a manageable to-do. It’s time to change that sentiment or feeling.
How to Estimate What You Owe—Without Getting Stuck in the Weeds
There are two simple ways to estimate your quarterly payments:
Option 1: Use Last Year’s Taxes
If your income is pretty stable, a safe rule is to pay 100% of what you owed last year, divided over four payments (110% if your 2024 adjusted gross income was over $150,000). This approach keeps you in the IRS’s “safe harbor,” meaning you won’t face penalties—even if you end up owing a bit more.
Option 2: Base It on This Year’s Income
If your income fluctuates—or is growing fast—you might want to calculate based on your current year’s earnings. Estimate your profit (revenue minus expenses), then set aside 25–30% for taxes. This covers federal income tax and self-employment tax for most business owners.
You will have to set a little more aside if you live in a state with an income tax as well.
Set Up a Simple, Repeatable Payment System
The most effective tax strategy? Consistency. Instead of scrambling every quarter, build a system that keeps your tax money organized from the start.
Start with a dedicated tax savings account. Every time you get paid, move 25–30% of that income into this account. This creates a clear line between “spendable” money and “spoken-for” money. It also removes the temptation to dip into tax savings when things get tight.
Automate where you can. Set calendar reminders a few days before each quarterly deadline (typically April 15, June 15, September 15, and January 15). If possible, set up recurring transfers or use your bank’s automation tools to build your tax buffer each week.
Use a payroll system if you pay yourself regularly. If you’ve structured your business as an S-Corp—or just prefer a more formal approach—a payroll service like Gusto, QuickBooks Payroll, or ADP can help. These platforms withhold taxes automatically and submit them for you, just like an employer would. It’s a great way to simplify the process and reduce risk, especially as your income grows.
But you will still owe estimates on any owner’s draws, so make sure to keep track of that as you go throughout the year.
Whether you transfer money manually or run it through a payroll system, the goal is the same: turn quarterly taxes into a routine, not a fire drill.
When to Recalculate (and When to Call for Backup)
One of the biggest advantages of working for yourself is flexibility. But it also means your income can shift—sometimes fast. A big new client or a seasonal slowdown can throw your tax estimates off track.
Make it a habit to revisit your numbers once a quarter. If your income jumps or drops significantly, adjust your payments accordingly. You don’t need to overhaul your system—just course-correct.
And if your business is growing or taxes are getting more complex? Bring in a professional. A financial planner – particularly one that’s well versed in taxes – can help you strategize around deductions, optimize your payment schedule, and ensure you’re not leaving money on the table.
