Good bookkeeping helps small businesses prepare for quarterly tax payments
Small business owners can benefit by paying taxes quarterly rather than annually. This is an ideal way to avoid having to pay a large lump sum every year. The drain on cash is easier and penalties can be avoided when tax payments are spread to every three months. However, a small business owner must be organized, disciplined, and maintain accurate bookkeeping records. Bookkeeping.net, a free service that connects businesses with bookkeeping professionals, offers three easy steps that business owners can take to simplify the process.
First, small business owners should get advice from a qualified tax professional to ensure that paying taxes quarterly rather than annually will be financially beneficial. A tax professional can help save a client money and time by avoiding additional tax penalties and by handling the small business bookkeeping for when the taxes are filed.
It is important to note that although payments are made four times a year, taxes are filed only once a year. The amount that is owed is simply divided into four equal payments so the total amount is more manageable.
Second, a small business owner needs to actually make the quarterly payments to the IRS at the appropriate times throughout the year.
Finally, a small business will need to ensure that its bookkeeping is maintained so it is able to manage the due dates of the payments. For non-corporations, these dates are April 15, June 15, September 15 and January 15. If any of these dates fall on a holiday or weekend, the payment will be due the next business day. Corporate taxpayers pay their fourth quarter payment on December 15.
When managing the bookkeeping to ensure these payments are made quarterly, it may be advisable to set up a separate bank only for tax payment savings. By having 25 percenet of all funds made directly deposited in this account, an owner can simplify saving for the payments.