Run it with less chaos · Every business
Setting Aside Money for Quarterly Taxes
Owners who move a fixed share of every deposit into a separate tax account the day it arrives tend to find the four estimated payments routine rather than a scramble.
If you are self-employed and expect to owe $1,000 or more in federal tax when you file, the IRS generally expects you to pay during the year in four estimated payments, due April 15, June 15 and September 15 of the tax year and January 15 of the next. The simplest way to have the money ready is to move a set percentage of every deposit into a separate savings account as it comes in, and to size the payments using either this year's expected tax or last year's actual tax.
General information, not legal/tax/financial advice; talk to a licensed professional about your situation.
The quarterly tax checklist
- Open a separate savings account for taxes at the same bank as your business account, so transfers are instant and the money is out of sight.
- Pick a set-aside percentage of net profit with your tax preparer. Self-employment tax alone is 15.3% of 92.35% of net profit, about 14.1%, before federal and state income tax.
- Move the set-aside every time money comes in, or once a week on the same day; the IRS also accepts payments split weekly, biweekly or monthly as long as enough is paid by the end of each period.
- Choose your safe-harbor target. You generally avoid the underpayment penalty by paying the smaller of 90% of this year's tax or 100% of last year's tax; if last year's adjusted gross income was over $150,000 ($75,000 if married filing separately), the prior-year figure is 110%.
- Put the four due dates on your calendar now: April 15, June 15, September 15 and January 15. A date that falls on a weekend or legal holiday moves to the next business day.
- Pay online, by phone or through the IRS app, or by mail with a Form 1040-ES voucher, and save each confirmation.
- Check your state's rules, since your state may have its own estimated payment requirements.
| Expected net profit this year (Assumption) | $80,000 |
|---|---|
| Self-employment tax on that profit (Calculated (15.3% × 92.35% × $80,000)) | $11,304 |
| Self-employment tax per quarter (Calculated ($11,304 ÷ 4)) | $2,826 |
| Last year's total federal tax (Assumption) | $18,000 |
| Quarterly payment at 100% of last year (Calculated ($18,000 ÷ 4)) | $4,500 |
| Quarterly payment at 110% of last year (AGI over $150,000) (Calculated ($18,000 × 110% ÷ 4)) | $4,950 |
Illustrative example; income tax depends on your full return, so confirm the amounts with a tax professional.
The prior-year method is often the easier one for an owner whose income swings, because the target is a fixed number known in January, while the current-year method can mean smaller payments in a year when profit falls.
Why it works
A set-aside that happens automatically removes the decision from the busiest weeks of the year, and the habit matters because cash is already tight at many small firms; in the Federal Reserve's 2024 survey of small employer firms, 51% named uneven cash flow as a financial challenge. Money that sits in the operating account tends to get spent on the operating account's problems, while money moved the day it arrives is still there in June.
Sources
- Internal Revenue Service. Estimated Taxes.
- Internal Revenue Service. Form 1040-ES, Estimated Tax for Individuals, 2026 (due dates, safe-harbor percentages, 92.35% rule).
- Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes).
- Federal Reserve Banks. 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey. 2025. 7,653 employer firms.
Related reading: The 30-Minute Weekly Money Check: Invoices, Bills, Tax Savings and Payroll · When to Hire a Tax Preparer for Your Small Business, and What to Bring · Paying Yourself as the Owner: Salary, Draws and What to Set Aside
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