Most business owners know they should be paying taxes quarterly. Far fewer actually understand why, what happens if they do not, and how to calculate the right amount every single time.

The IRS operates on a pay-as-you-go system. For employees, this happens automatically through paycheck withholding. For business owners and self-employed individuals, it falls entirely on you to estimate your annual tax liability and send in payments four times per year. Miss these payments or significantly underpay and you will face an underpayment penalty at year-end, even if you write a check for the full amount owed in April.

Who Must Pay Quarterly Estimated Taxes

You are generally required to pay quarterly estimated taxes if you expect to owe at least $1,000 in federal taxes after subtracting withholding and credits, and your withholding will cover less than 90 percent of your current year tax liability or 100 percent of last year’s liability. For most self-employed individuals, freelancers, S-corp shareholders who take distributions, and business owners taking draws, this threshold is reached relatively quickly.

The Safe Harbor Shortcut

Rather than spending hours calculating your exact projected income and tax liability each quarter, most business owners benefit from using the safe harbor rule. Pay at least 100 percent of your prior year tax liability spread evenly across four quarters and you will avoid any underpayment penalty, regardless of how much you actually owe at year-end. For higher earners, the threshold is 110 percent of prior year liability.

2026 Quarterly Tax Due Dates

Q1 (Jan through Mar)

April 15 — Q2 (Apr through May)

June 16 — Q3 (Jun through Aug)

September 15 — Q4 (Sep through Dec)

January 15 of following year.  Mark these on your calendar now and set aside funds consistently throughout the quarter.

The Bookkeeping Connection

Accurate quarterly tax payments require accurate quarterly books. If your bookkeeping is three months behind, you cannot calculate an informed estimated payment. This is one of the most direct and measurable ways that up-to-date bookkeeping saves money: you neither overpay (which is an interest-free loan to the government) nor underpay (which triggers penalties and a year-end cash shock).

Set It and Forget It

The cleanest system is automatic: maintain real-time books, run your projected tax liability report each quarter, and pay online through IRS Direct Pay within 30 minutes. No paper, no checks, no mail. If you have a bookkeeper managing your books monthly, they should be generating this estimate for you as part of regular service.