Nobody withholds income tax from your practice's profit, so you pay it during the year in four estimated payments. Get the amounts from your CPA, pay them on time from your personal account, and set the money aside every month so each payment is easy.
Who pays them
If your practice is a sole proprietorship, an LLC or an S corp, its profit flows onto your personal tax return. So the estimated payments are yours, not the practice's. You don't need a separate business IRS account to pay them. They go on your personal tax account, under your Social Security number.
When they're due
- April 15
- June 15
- September 15
- January 15 of the next year
When a date lands on a weekend or holiday, it moves to the next business day. Notice the gaps aren't even. June comes two months after April, and January comes four months after September.
If your state has an income tax, it likely has its own estimated payments too. Texas doesn't, but many states do.
How much to pay
Your CPA sets the amounts. A common approach is a safe harbor, a payment level that avoids the underpayment penalty even if you owe more when you file. In general, that means paying at least 100% of last year's total tax, or 110% if last year's income was over $150,000, split into four equal payments. The other route is paying at least 90% of this year's tax.
The safe harbor protects you from the penalty, not from the bill. If the practice grows, you can still owe a balance in April.
If you're an S corp
Tax withheld from your salary counts toward what you owe. Some owners raise the withholding on their own paychecks instead of making separate estimated payments. Ask your CPA whether that fits you.
How to pay
You can pay through IRS Direct Pay, your IRS online account, or EFTPS. Pay from your personal account and keep the confirmation.
If you pay from the practice's account, your bookkeeper records it as an owner draw or distribution, never as a business expense. It's your tax, not the practice's.
Set it aside every month
Open a separate savings account for taxes. Each month, move one-twelfth of the year's estimated total into it. In a made-up example, if your CPA expects $24,000 in estimated payments for the year, that's $2,000 a month, and the account is ready each time a payment comes due. This post shows where the tax set-aside fits in owner pay.
What I'd do this week
- Ask your CPA for the amount of your January payment, and next year's four amounts.
- Check that every payment for this year went in, and find the confirmations.
- Set up the monthly transfer to your tax savings account.
Common questions
What if I missed a payment?
Pay it as soon as you can. The penalty works like interest, so it grows the longer the payment is late. Tell your CPA so they can account for it.
Should the practice pay my estimates?
Pay them from your personal account. If the practice pays them, they're recorded as an owner draw or distribution, never as a business expense.
Do the amounts change if profit jumps?
They can. If the practice is doing much better than last year, ask your CPA to update the remaining payments.
Want to know your profit before each payment is due?
We close your books every month and send your P&L and Balance Sheet by the 15th, so you and your CPA can see where profit is heading before each payment. If that's what you need, apply to work with us.