Along with the pride and perks of running your own business come the responsibilities, one of which is paying quarterly estimated taxes. Even George Washington acknowledged that "No taxes can be devised which are not more or less inconvenient and unpleasant." Setting some strategies in place, however, can help your quarterly tax process become more convenient for your business.
April 15, 2019 is not just the 2018 tax deadline. For calendar year taxpayers, it's also the first quarterly payment due date for 2019 income taxes. The remaining three federal quarterly 2019 payments are due June 17, Sept. 16 and then Jan. 15, 2020.
When estimated taxes are not paid in a timely and accurate manner, you may be subject to penalties, even if you are due a refund when you file your income tax return. This may mean not enough was paid. Or it may mean not enough was paid in the quarter that it was due. The general rule is that at least 90% of your final income tax is to be paid through your quarterly estimated payments. Of course, there are exceptions to every rule, so consult your CPA to determine your quarterly payment amount.
Quarterly IRS payments don't need to sneak up on you if you devise a system to set money aside on a regular basis. You may consider setting up automatic payments into an account dedicated specifically to quarterly tax payments. Choose an account that allows you to make online payments to the IRS and you've built in even more convenience. An Edward Jones financial advisor can help you open such an account, one that also lets you set quarterly due date reminders and is easily accessible online and via our mobile app.
As the saying goes, "Life is what happens when you're busy making plans." Even with the best-laid plans, you may not have enough cash to make your quarterly payment when due. In these situations, you may be able to access your Personal Line of Credit* at Edward Jones. Your financial advisor can work directly with you and your CPA to explore whether this option is right for you.
There are many tax-advantaged investments that may help you reduce your tax liability. Retirement plans, for example, may allow you to reduce or defer your taxes while offering the added benefit of preparing for your future. An Edward Jones financial advisor, together with your tax professional, can help you explore strategies to reduce your total tax bill.
By working to minimize your tax bill and simplify the quarterly IRS payment process, you can rest assured that this process should flow smoothly. Then you can shift your focus to the other 999 details that your small business demands.
Here are some great resources to review this tax season:
* Our Personal Line of Credit is a margin loan and is available only on certain types of accounts. Investing on margin or using a margin loan involves risk and is not appropriate for everyone. You can lose more funds than you deposit in the margin account. If the value of the securities in your margin account decline, you may be required to deposit cash or additional securities. In the event of a margin call, the firm can sell securities or other assets in your accounts and can do so without notice to you. You may not be entitled to choose which securities or other assets in your accounts are liquidated or sold to meet a margin call. The firm can increase its maintenance margin requirements at any time and/or not grant an extension of time on a margin call. Interest will begin to accrue from the date of the loan and be charged to the account.
Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.