How do handle business quarterly taxes for a side business?

[bender_1227]

How do handle business quarterly taxes for a side business when I am also a w-2 employee of a company?

I work for a company and get a w-2.  I also sell products online and need to pay quarterly federal and state taxes on my earnings.  I buy products from a manufacturer and sell them through different e-commerce channels as well as through a few brick and mortar stores.  

I know I need to pay federal and state quarterly taxes I'm just trying to figure out how to exactly do that and how to also handle that as a w-2 employee.

My side business is an LLC that is a pass through entity to my regular taxes.

[VolvoGirl]

What kind of LLC?   Is it a S Corp?  Do you file a separate Business return for it like a 1065 or 1120?

You may need to pay quarterly estimated payments.   Or increase the withholding on your W2 income to cover the extra tax.

If it is a Single Member LLC it is a disregarded entity and you file it on Schedule C in your personal tax return.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

    90% of the tax to be shown on your current year’s tax return, or

  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

To prepare estimates for next year you start with your current return, but be careful not to change anything.  For Online returns, if you can't get back into your return, Click on Add a State to let you back into your retun.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

Or Go to….

Federal Taxes or Personal (Desktop H&B)

Other Tax Situations

Other Tax Forms

Form W-4 and Estimated Taxes - Click the Start or Update button

To just estimate the remaining quarters put in that you paid $1 for the missed quarters so it will only calculate the remaining quarters.

How to make the Estimated payments

https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 18, June 15, Sept 15 and Jan 17, 2023.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2022 Estimate

[rjs]

Quarterly estimated tax payments are not just for your business. Since your business is a pass-through entity, your business income is not taxed separately from your W-2 income or other personal income. On your tax return, basically, all of your income is added together and the tax is calculated on the total. The tax withheld from your paychecks as an employee, and your estimated tax payments, are added together and applied to your total tax. That's why you can choose to increase the withholding on your W-2 income to cover part or all of the tax on your business income, or make larger estimated tax payments to cover part of the tax on your W-2 income. It's only the totals that matter.

[bender_1227]

Thank you for the help!

We are an LLC that is a disregarded entity.  

Last year our LLC took a loss as we are in start up mode.  

My w-2 job paid all of my bills.  

We did have some revenue last year but since we took a loss do I need to pay quarterly taxes this year?  

If so would I just need to estimate what our revenue is going to be minus expenses.  Then multiply that number by my tax rate and divide that by 4 to get the quarterly monthly payments?  

[rjs]

---

@bender_1227 wrote:

We did have some revenue last year but since we took a loss do I need to pay quarterly taxes this year?    

---

Again, your quarterly estimated tax payments depend on your total income and total tax, not just your business income. So the fact that you had a business loss last year is irrelevant. In the first post above, VolvoGirl gave you the rules for determining whether you have to make estimated tax payments.

---

@bender_1227 wrote:

If so would I just need to estimate what our revenue is going to be minus expenses.  Then multiply that number by my tax rate and divide that by 4 to get the quarterly monthly payments?  

---

No. You can't base your quarterly estimated tax payments on just your business income. VolvoGirl also gave you instructions for how you can use TurboTax to calculate your estimated tax payments.

You have already missed the first two payments for this year. You can make a late second payment, but the amount will have to be double to make up for not having made the first payment.

[bender_1227]

Okay got it. Thank you for your help.   This makes more sense now to me.  

[bender_1227]

Thank you for your help with this!!!!