How to Handle Estimated Taxes in 2025: A Guide for Small Business Owners
Estimated taxes might be the most misunderstood part of running a small business. If you’re self-employed or just launched your first venture, you may be required to make quarterly tax payments to the IRS—and not just in April.
In this quick 13-minute video, Katie Bunschoten, CEO and Founder of Certum Solutions, walks you through the essential things to know about estimated tax payments in 2025: how they work, who has to pay, what forms to use, and how to avoid penalties.
Watch below, then keep reading for key takeaways and tips you can implement today.
Watch Now: Estimated Taxes 2025 Explained
*Disclaimer Note: This video is intended for educational and informational purposes only and should not be considered tax, legal, or accounting advice. For guidance specific to your situation, please consult a qualified tax professional. The content focuses on federal estimated tax payments, including how to calculate and submit them. Please note that state and local tax requirements may differ, and it’s important to check with your state and local tax authorities for any additional obligations or deadlines. This video is presented by a participant in the IRS Annual Filing Season Program (AFSP) but is not a substitute for personalized tax advice.
What Are Estimated Taxes?
Estimated taxes are quarterly payments made to the IRS throughout the year, typically by people who don’t have taxes automatically withheld from their paychecks. This includes:
Sole proprietors
Partnerships
S Corporation shareholders
Freelancers and side hustlers
If you expect to owe $1,000 or more in taxes for the year after withholding and credits, you’re likely required to file.
2025 Estimated Tax Due Dates
Mark your calendar with these key dates:
April 15, 2025 (Q1)
June 16, 2025 (Q2)
September 15, 2025 (Q3)
January 15, 2026 (Q4)
Note: These don’t follow standard calendar quarters
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How to Calculate What You Owe
You’ll want to use IRS Form 1040-ES and consider:
Your estimated income for the year
Self-employment tax (EE and ER fica)
Business deductions and credits
Any W-2 withholdings if you still have a part-time job
Katie breaks down how to use the 1040-ES worksheet in the video and shares her best tips for business owners.
Pro Tip:
Even if you work with a tax preparer, the IRS sees you as responsible for getting payments right. The more you know, the better you’ll sleep come April.
Avoiding IRS Penalties
The best way to stay out of trouble?
Keep a tax savings account year-round
Work with a trusted advisor (…Certum Solutions 😉)
Pay a little extra each quarter to ensure you’re covered
Use the IRS online account to monitor your tax status
Estimated Taxes FAQ & 2026 Update
IMPORTANT COMPLIANCE DISCLAIMER:
This content is intended for educational and informational purposes only and should not be considered tax, legal, or accounting advice. Tax laws and regulations change frequently, and individual circumstances vary significantly. The information provided here represents general guidance based on federal tax requirements as of the date of publication.
For guidance specific to your situation, please consult a qualified tax professional. This content focuses on federal estimated tax payments. State and local tax requirements may differ significantly, and it's important to check with your state and local tax authorities for any additional obligations or deadlines.
Certum Solutions and its representatives participate in the IRS Annual Filing Season Program (AFSP). While we strive for accuracy, the ultimate responsibility for tax compliance rests with the taxpayer. This content should not be considered a substitute for personalized tax advice from a licensed tax professional familiar with your specific circumstances.
Frequently Asked Questions About Estimated Taxes
General Questions
Q: What exactly are estimated taxes? A: Estimated taxes are quarterly payments made to the IRS to cover your income tax and self-employment tax liability throughout the year. Unlike W-2 employees who have taxes automatically withheld from each paycheck (through their W-4), self-employed individuals and business owners need to make these payments directly to the IRS. This applies to Schedule C sole proprietors, partnerships (Form 1065), and even S corporation shareholders who may have income beyond their W-2 wages from the S corp.
Q: How do I know if I need to pay estimated taxes? A: You're generally required to make estimated tax payments if you expect to owe $1,000 or more in taxes for the year after subtracting withholding and credits. This typically applies to sole proprietors, partners, S corporation shareholders, freelancers, and anyone with significant income not subject to withholding.
Q: Can I just pay all my taxes when I file my return in April? A: While you technically can, the IRS requires tax payments throughout the year. If you wait until April to pay everything, you'll likely owe underpayment penalties and interest, even if you pay your full tax bill on time.
Q: What's the penalty for not making estimated tax payments? A: The IRS charges an underpayment penalty based on the current interest rate (which varies quarterly). The penalty is calculated on the amount you should have paid versus what you actually paid, and for how long you were underpaid. It can add up to several hundred dollars or more depending on your situation.
Calculation & Payment Questions
Q: How do I calculate how much to pay each quarter? A: Use IRS Form 1040-ES, which includes a worksheet to help estimate your annual income, deductions, and credits. Generally, you'll need to pay either 90% of your current year's tax liability or 100% of last year's tax liability (110% if your adjusted gross income was over $150,000), divided into four payments.
Q: Do the quarterly payments need to be equal amounts? A: No! While many people pay equal amounts each quarter for simplicity, you can adjust your payments based on when you actually earn income. This is called the "annualized income method" and can be helpful if your income fluctuates seasonally.
Q: What is self-employment tax and why is it so significant? A: Self-employment tax is essentially both the employee and employer portions of FICA (Federal Insurance Contributions Act) taxes combined. When you work as a W-2 employee, your employer pays half of your FICA taxes and you pay the other half. As a self-employed individual, you're responsible for paying both portions—the full amount. This is often a surprise for new business owners and is a major driver of increased tax payments.
The good news is that you can deduct half of your self-employment tax as an "above the line" deduction when calculating your adjusted gross income. Here's how it works: You start with your gross income, then subtract "above the line" deductions (like half your self-employment tax, retirement contributions, health insurance premiums) to arrive at your adjusted gross income (AGI). Then you take your "below the line" deductions (like the standard deduction or itemized deductions) to arrive at your taxable income. The Form 1040-ES worksheet follows these same lines that appear on your Form 1040.
Q: What if my income changes significantly during the year? A: You can adjust your estimated payments up or down as your income changes. If you have a profitable quarter, increase your payment. If business slows down, you can reduce your next payment. Just be sure you're still meeting the safe harbor requirements to avoid penalties.
Q: I have a W-2 job and a side business. Do I still need to make estimated payments? A: It depends. If your W-2 withholding covers enough of your total tax liability (including from your side business), you may not need to make estimated payments. Alternatively, you can ask your employer to withhold extra from your paycheck using Form W-4 to cover your side business taxes.
Can I pay more than required to be safe? A: Absolutely! Katie strongly recommends this approach. As she explains in the video, it's better to overpay during the year and get a refund when you file your return than to underpay and face penalties. The worksheet is called an "estimated" tax worksheet for a reason—that first word is key. You don't know your actual tax liability until you complete your final tax return. The IRS wants to ensure you pay in more than you'll owe throughout the year, and they will penalize you if you underpay. It's better to be cautious and keep a tax savings account with extra funds set aside, just in case something unexpected pops up during the year.
Forms & Filing Questions
Q: What form do I use to make estimated tax payments? A: Use Form 1040-ES for calculating and submitting your estimated tax payments. The form includes payment vouchers if you're mailing a check, but most people now pay electronically through IRS Direct Pay, EFTPS, or by credit/debit card.
Q: How do I make my estimated tax payment? A: You have several options:
IRS Direct Pay (free, directly from your bank account)
EFTPS (Electronic Federal Tax Payment System - free, requires enrollment)
Credit or debit card (through IRS-approved payment processors - fees apply)
Mail a check with payment voucher from Form 1040-ES
IRS Online Account - Many taxpayers now have IRS tax accounts where you can sign in, see what you owe, get statements, and make payments directly. If you haven't set up your online account yet, it's a great tool for monitoring your tax situation throughout the year.
Q: Do I need to file Form 1040-ES with the IRS? A: No, Form 1040-ES is for your use in calculating payments. You only send the payment vouchers if you're mailing a check. If paying electronically, you keep the form for your records.
Q: What about state estimated taxes? A: Most states with income tax also require estimated tax payments. The rules and due dates may differ from federal requirements, so check with your state's tax authority. Some states follow the federal schedule, while others have different deadlines. Important note: State taxes do NOT necessarily mimic federal taxes—they can be completely different. Don't assume your state follows the same rules as the IRS. Additionally, some localities may have their own taxes based on gross receipts, property (ad valorem), or other factors. It's important to check both state AND local requirements where you do business.
Specific Situations
Q: This is my first year in business. How do I estimate my taxes with no prior year to reference? A: Make your best projection of income and expenses for the year. It's better to overestimate than underestimate. Consider working with a tax professional for your first year to help you set up good systems and avoid costly mistakes. As Katie mentions in the video, when you're working with your tax preparer at the end of the year, they can create your vouchers for the following year. If you know you'll have a significant increase or decrease in income, discuss those scenarios with them. Most tax software has a way to build projections so your vouchers are correct and accurate, and then you have them ready for the remaining year.
Q: What if I miss a quarterly deadline? A: Make the payment as soon as possible. You'll likely owe a penalty for the period you were late, but the penalty stops accruing once you pay. Don't skip it entirely—that will only make the penalty larger.
Q: I sold a major asset (house, stocks, business). Do I need to make estimated payments on the gain? A: Yes, if the sale creates a significant capital gain and you don't have enough withholding to cover it. You can make an estimated payment for just that transaction to avoid underpayment penalties.
Q: Are estimated taxes only for federal taxes? A: No. Depending on where you live and do business, you may also need to make estimated payments for state income tax, local taxes, and in some cases, self-employment tax at the state level. Always check your state and local requirements.
Q: Can my tax preparer make estimated payments for me? A: While your tax preparer can help you calculate what you owe and may even create payment vouchers for you, you are ultimately responsible for making the payments. Some accounting firms offer bill-pay services, but you'll need to arrange this specifically. The IRS holds you—not your preparer—responsible for timely and accurate payment. As Katie emphasizes in our video: even if you work with a tax professional, the IRS sees you, the taxpayer, as the person responsible for your tax obligations. This is why it's important to understand your tax situation and take ownership of it.
Q: What's the safe harbor rule? A: The safe harbor rule protects you from underpayment penalties if you pay either:
90% of your current year's tax liability, OR
100% of your prior year's tax liability (110% if your prior year AGI was over $150,000)
If you meet either threshold, you won't owe penalties even if you end up owing more when you file.
Q: Should I set up a separate account for tax savings? A: Yes! One of the best practices for managing estimated taxes is to set aside 25-35% of your business income in a separate savings account. This ensures you have the funds available when payments are due and helps you avoid scrambling at the last minute.
Q: Why is it important for me to understand my own tax situation if I have a professional handling it? A: As Katie emphasizes in the video, even if you use a tax preparer, the IRS sees YOU as the person responsible for your taxes. It's critically important to take ownership of your tax situation and understand what you're dealing with, where the numbers come from, and what your tax liability actually is. While taxes can seem intimidating at first, when you learn what's applicable to your individual situation, it becomes much less scary. Ask questions, educate yourself, and understand what your advisors are telling you—this knowledge will help you make better business decisions throughout the year.
Q: What other factors might affect my estimated tax calculations? A: Several things can significantly impact your tax burden beyond just income and self-employment tax. These include:
Depreciation - If you're depreciating fixed assets (equipment, vehicles, property), this reduces your taxable income
Accelerated depreciation - Section 179 or bonus depreciation can create large deductions in the year of purchase
Retirement contributions - SEP IRA, Solo 401(k), and other retirement plan contributions
Health insurance premiums - If you're self-employed
Business deductions - Legitimate business expenses that reduce your net profit
Tax credits - Various credits you may qualify for
This is why Katie emphasizes that estimated tax planning "gets real complicated real fast" and strongly recommends working with a tax professional who can help you navigate these factors for your specific situation.
2026 Estimated Tax Due Dates:
April 15, 2026 (Q1) - Payment for January - March income
June 16, 2026 (Q2) - Payment for April - May income
September 15, 2026 (Q3) - Payment for June - August income
January 15, 2027 (Q4) - Payment for September - December income
Read The Full Article Here: https://www.certumsolutions.com/library/2026-tax-calendar-deadlines-business-owners
CRITICAL REMINDER: These dates do NOT follow standard calendar quarters! As Katie explains in the video, the IRS follows a fiscal calendar, not a calendar year. Don't assume that estimated tax payments are due 15 days after the end of each calendar quarter—you'll miss your deadlines. The second and third quarter payments are particularly tricky because they fall in the middle of their respective quarters. Mark these specific dates on your calendar!
Still Have Questions?
Every business situation is unique. If you're unsure about your estimated tax obligations or want personalized guidance for your 2026 tax strategy, we're here to help.
Katie's Final Advice: Don't wait until you're surprised at tax time. Be prepared throughout the year. Mark your calendar with the correct payment dates (remember, they're NOT calendar quarters!), keep a tax savings account, and work with professionals who can help you understand your specific situation. Certum Solutions can help you directly!
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Additional Resources
📥 Download Our 2026 Tax Calendar: [Free Download - Coming Soon]
📺 Watch the Full Video Tutorial: Estimated Taxes Explained
📄 IRS Official Resources:
Disclaimer: This information is intended for educational and informational purposes only and should not be considered tax, legal, or accounting advice. For guidance specific to your situation, please consult a qualified tax professional. The content focuses on federal estimated tax payments, including how to calculate and submit them. Please note that state and local tax requirements may differ, and it's important to check with your state and local tax authorities for any additional obligations or deadlines. This content is provided by participants in the IRS Annual Filing Season Program (AFSP) but is not a substitute for personalized tax advice.
Tax laws change frequently, and individual circumstances vary significantly. While we strive for accuracy and completeness, Certum Solutions makes no warranties or guarantees regarding the accuracy, completeness, or adequacy of the information contained in this document. Always verify current tax law with official IRS publications or a qualified tax professional before making financial decisions.
Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.