Quarterly Estimated Taxes for Small Business Owners: A Plain-English Guide

If you’re self-employed or own a business that doesn’t withhold taxes from your income, the IRS expects you to pay taxes throughout the year — not just at filing time. These are quarterly estimated tax payments, and getting them wrong is one of the fastest ways to end up with a penalty you didn’t see coming.

Here’s how estimated taxes actually work, when they’re due, how to calculate them, and how to avoid the most common mistakes.

Who Needs to Pay Estimated Taxes

If you expect to owe $1,000 or more in federal taxes after subtracting withholding and credits, the IRS generally requires you to make estimated payments. This applies to sole proprietors, single-member LLC owners, partners, S-Corp shareholders, and anyone with significant income that isn’t subject to withholding.

S-Corp owners who pay themselves a salary have some withholding built in. But if your distributions significantly exceed your salary, or if your business income is growing, your withholding alone probably won’t cover the full tax liability. That’s where estimated payments fill the gap.

When Estimated Taxes Are Due in 2026

The IRS breaks the tax year into four uneven payment periods. The due dates for 2026 estimated taxes are:

• Q1 (January–March): Due April 15, 2026

• Q2 (April–May): Due June 15, 2026

• Q3 (June–August): Due September 15, 2026

• Q4 (September–December): Due January 15, 2027

Notice that Q2 only covers two months. That catches a lot of people off guard. You make your first payment April 15, and the second is due just two months later.

How to Calculate Your Estimated Payments

There are two safe harbors that protect you from underpayment penalties. You need to meet one of them:

• Pay at least 90% of your current year tax liability through estimated payments and withholding, or

• Pay at least 100% of your prior year tax liability (110% if your AGI exceeded $150,000).

The prior-year safe harbor is the easier method for most small business owners. Pull last year’s total tax from your return (Form 1040, line 24), divide by four, and pay that amount each quarter. Even if your income increases this year, you won’t face an underpayment penalty as long as you hit that threshold.

The Most Common Mistakes

Waiting until year-end to make a single large payment. The IRS charges penalties by quarter, not annually. Even if you pay the full amount in January, you’ll owe penalties for the quarters you missed.

Guessing the amount instead of using actual numbers. If your books aren’t current, your estimated payments are based on a guess. That’s how you end up either overpaying (tying up cash you need) or underpaying (triggering penalties).

Forgetting self-employment tax. Estimated payments need to cover both income tax and self-employment tax. If you only account for income tax, you’ll come up short.

How Current Books Make This Easier

If your books are current and reconciled, calculating estimated taxes is straightforward. You know your year-to-date income, your year-to-date expenses, and your projected annual profit. From there, you can calculate the tax and make accurate quarterly payments.

If your books are three months behind, you’re estimating your estimates. That’s how small problems become expensive ones.

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If you want a system that keeps your books current and your estimated payments accurate, that’s exactly what our Tax-Ready Business service is built for. Or schedule a consultation to talk through your specific situation.