For many small business owners, taxes can feel like a headache that never ends. Unlike employees who have taxes automatically withheld from their paychecks, small business owners often need to pay taxes quarterly. While this might sound intimidating, understanding the process can make it far less stressful—and even help you manage cash flow throughout the year.

What Are Quarterly Taxes?

Quarterly taxes, also called estimated taxes, are payments made to the IRS (and sometimes state tax agencies) four times a year. They cover income taxes, as well as self-employment taxes, which include Social Security and Medicare contributions. For small business owners, freelancers, and independent contractors, quarterly taxes prevent a big tax bill at the end of the year and keep you compliant with the law.

Andre Shammas often reminds clients that paying quarterly taxes isn’t optional if you expect to owe $1,000 or more in taxes for the year. Skipping these payments can lead to penalties and interest, which can be costly.

Step 1: Estimate Your Taxable Income

The first step in preparing for quarterly taxes is estimating your taxable income. This includes all money your business earns, minus deductible expenses like office supplies, software, travel, and professional services. Keeping accurate records throughout the year makes this process much simpler.

Andre Shammas suggests creating a monthly summary of income and expenses. Doing this not only helps with accurate tax estimates but also gives you a clear picture of your business’s financial health.

Step 2: Calculate Your Estimated Taxes

Once you have your estimated taxable income, you can calculate your quarterly taxes. Generally, you should account for both income tax and self-employment tax. The IRS provides Form 1040-ES, which includes a worksheet to help estimate payments based on your income and deductions.

For those who want a simpler approach, you can take your previous year’s tax return and divide your total tax owed by four. This is a safe method if your income hasn’t changed significantly year over year. Andre Shammas emphasizes that this method may not work if your business is growing quickly or experiencing fluctuating income, in which case recalculating each quarter is wiser.

Step 3: Set Aside Money Each Month

A common mistake small business owners make is waiting until a quarterly due date to figure out how much to pay. Instead, set aside a portion of each month’s income specifically for taxes. Many freelancers and small business owners aim to save around 25–30% of each month’s earnings, which generally covers both income and self-employment taxes.

Andre Shammas recommends opening a separate bank account for tax savings. This reduces the temptation to spend money earmarked for taxes and ensures you always have the funds available when payments are due.

Step 4: Know the Deadlines

Quarterly tax deadlines are typically:

• April 15 – Covers income from January 1 to March 31
  
• June 15 – Covers income from April 1 to May 31
  
• September 15 – Covers income from June 1 to August 31
  
• January 15 of the following year – Covers income from September 1 to December 31
  

Missing these deadlines can trigger penalties, so mark your calendar and set reminders. Andre Shammas often advises small business owners to schedule these dates into their accounting software or phone calendar to stay on track.

Step 5: Make the Payment

Once your estimated taxes are calculated, you can pay online, by mail, or through the IRS’s Electronic Federal Tax Payment System (EFTPS). Online payments are quick, secure, and allow for easy confirmation that your payment was received. Many states also have similar online payment systems for state taxes.

Andre Shammas highlights that automating payments when possible is a great way to avoid late fees. Setting up recurring payments through EFTPS ensures you never miss a deadline.

Step 6: Keep Accurate Records

Every payment you make should be documented. Keep copies of receipts, confirmations, and bank statements. Not only does this simplify filing your annual tax return, but it also protects you in case of an audit.

Andre Shammas emphasizes that good record-keeping is one of the best habits a small business owner can develop. It makes quarterly taxes less stressful and gives you a clear financial picture to guide business decisions.

Step 7: Adjust as Needed

Quarterly taxes aren’t set in stone. If your income changes during the year, you can—and should—adjust your estimated payments. For example, if your business has a slow quarter, you might lower your payment; if you experience unexpected growth, you may need to increase your payment.

Monitoring your business performance regularly allows you to make adjustments proactively, which can prevent surprises at the end of the year. Andre Shammas notes that staying flexible and informed is key to staying ahead of tax obligations.

Final Thoughts

Quarterly taxes may seem daunting at first, but breaking the process into clear steps makes it manageable. By estimating your income, calculating payments, setting aside money, and staying organized, you can take control of your tax obligations rather than letting them control you.

Andre Shammas often says that the key to stress-free taxes is preparation. Staying ahead of deadlines, maintaining accurate records, and making adjustments as needed ensures that small business owners can focus on growing their business without worrying about unexpected tax bills.

In the end, quarterly taxes aren’t just a requirement—they’re a tool to help you manage cash flow, plan for the future, and build a sustainable business. With the right approach, you can navigate tax season with confidence and peace of mind.