Most people get taxes taken directly from their bi-weekly paychecks. This isn’t the case for business owners, who have to pay taxes on a quarterly basis year-round. It’s intimidating at first, but a few simple lessons will make this process simple. There are differences in how this works for businesses vs. self-employed individuals, so read each section carefully.
Estimated Taxes for Corporations
One way or another, every business person makes estimated tax payments on their income. If your business is a pass through entity, you make estimated taxes for your personal tax return. A corporation, on the other hand, pays taxes on its income and submits estimated business taxes periodically during the year. Here’s an example for a corporation: Openmeadow Gifts, a C corp, earned $100,000 in year one and paid $20,000 in taxes. Bob, the majority owner of Openmeadow, works with his CPA to plan for estimated tax […]