Paying taxes after the due dates would have repercussions for the taxpayer because at the end, all of this ultimately adds penalties and/or interests to the tax bill. Paying estimated taxes is something that no one enjoys….Most self-employed individuals would rather do something else than trying to figure out how much they are going to owe in taxes at the end of the year. To avoid paying costly penalties and other issues that can potentially come up as a result of failure to make the required quarterly estimated tax payments; form 1099 earners, independent contractors, and other business owners in this capacity have to make those payments four times a year rather than just waiting to pay at the end of the fiscal year or when it comes time to file taxes. Luckily, there are some benefits to paying your estimated taxes quarterly each year. Please call if you ever need help figuring out your estimated taxes and due dates or need assistance setting up EFTPS, we are always standing by to lend a helping hand.
Most small business owners wear many hats and as a result, they may not be ready to take on all that bookkeeping and organization demands in order to get tax returns done on time. Many even underestimate the amount of their tax bill, only to find out at the end of the year that it is much higher than what was budgeted for.
Paying your taxes at the end of the year can seem daunting. Most small business owners and self-employed individuals who work from home are less likely to make timely estimated tax payments. There is often this assumption that there is plenty of time to get it all done without much stress. But the reality is that the government wants its tax revenue up front. So if you are required to make quarterly estimated tax payments but fail to do so, or if your pre-paid amount is not enough, then you become liable for non-deductible interest penalties.
Being proactive with your bookkeeping is a practice that brings many rewards; you can generate financial statements, make both short and long-term projections based on the information at your fingertips. The good news is that this doesn’t just help you to meet your tax obligations, but when you are working on your bookkeeping more often, you are less likely to miss out on important business factors that could influence how well or poorly your business does.
Don’t miss the payments because at the end you are responsible for this and the IRS is not going to remind you. Again, if you fail to make your estimated tax payments, you are more likely to incur penalties. It is critical that you pay them at the right time each quarter so you don’t have to pay extra money on top of what you already owed. The good news here is that Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than $1,000 (also referred to as the de minimis amount), no penalty is assessed.