For your quarterly business taxes, the IRS has instructions, forms and a worksheet you can use to figure it at https://www.irs.gov/pub/irs-pdf/f1040es.pdf But personally, I find it waste of time, effort and brainpower. I've been self-employed for 13 years, and all I do is send in 20% of my business earnings each quarter. Then at tax time, I'm well within 10% of my total tax liability. Some years at tax time I owed more. But it was always less than $500. Most years I got a refund which was also less than $500.
What you got to keep in mind is that if you owe at tax time, and if what you owe is more than 10% of your total tax liability (based on your total household income and not just business income) then you will be assessed an underpayment penalty for not paying enough quarterly taxes. So for me, 20% is my magic number.
If your total household income from all sources is projected to be more than $100,000 for the tax year, then you will be in a higher tax bracket and you should send in at least 25% of your gross business earnings each quarter.
Generally it's best to overpay the first year of business. Then you'll get a refund. So after that first year you'll have a better idea of just how much you need to pay each quarter so that you're not using the IRS as a no-interest paying savings account, as well as not underpaying your taxes.
But of course, if you really want to go through what in my opinion is the unnecessary hassle of the instructiions and worksheets, go ahead if it makes you feel better about it.
For actually paying your quarterly taxes, you can use the 1040-ES forms included in the website referenced above, or you can pay them online each quarter at http://www.irs.gov/directpay. If you pay online, make sure to print out your receipt and file it with your business records.
The three most important rules to remember when dealing with the IRS on this stuff is.
- You are guilty until proven innocent.
- The burden of proof is on the accused (that's you), not the accuser.
- If it's not in writing, then did not occur.
So keep extremely detailed business records of every single business transaction, no matter how small that transaction may be.
