17 Apr Income Taxes & the Self Employed
Those of us who are self employed don’t have regular paychecks from which income taxes can be withheld from each check we get.
We are expected to make quarterly tax deposits toward our expected liability, on pain of penalties for forwarding Uncle Sam too little prior to submitting our return.
With the ups and downs of most small businesses, budgeting is difficult, and setting aside tax money for that quarterly deposit is often a real challenge. It’s all too easy to put off setting aside money for the quarterly deposit or to dip into the money you’ve set aside for the deposit when some crisis arises.
There is an alternative that might help entrepreneurs avoid being caught short of funds to pay the taxes or being penalized for inputting too little.
Make a tax deposit each month.
The provision for making quarterly deposits is a convenience and a minimum.
There is no rule that says you can’t make a tax deposit more frequently than each quarter.
Make a deposit when the money comes in; set aside the government’s share before you even consider that it is yours to spend.
Just put your taxpayer number and the tax year to which the money is to be credited on the check. Make this part of your business life easier and save your energy for running your business.
And don’t wait for perfect information before making those deposits. An extension of time to file last year’s return shouldn’t slow you down in depositing an estimate for this year’s tax.
Image courtesy of Gerard Van der Leun.
Cathy Moran, Esq.
Latest posts by Cathy Moran, Esq. (see all)
- Can You Afford The Cost Of Waiting? - November 10, 2013
- Lost IQ: The True Cost Of Just Paying The Credit Card Minimum - October 10, 2013
- Getting Rid Of Tax Liens After Bankruptcy - September 10, 2013
- Why The Information You Give Your Bankruptcy Lawyer Has A Sell-By Date - August 27, 2013
- Super Heroes Fight Debt - August 10, 2013