Hi everyone,
I'm planning on launching a startup company (Delaware C-Corporation) and thus the main tax return my company needs to file is form 1120 (on April 15 for the previous year).
But the actual taxes need to paid quarterly throughout the year (on April 15, June 15, September 15, and December 15). The idea is to estimate your current year's taxes at the beginning (with form 1120-W), and pay 25% of that each quarter.
But as a newly launched startup, I have no idea what my profit/loss/taxes will be. What if I estimate $10k in taxes for a year (and accordingly pay $2.5k for the first 2 quarters), but then I have unexpectedly high sales in the last 2 quarters which increases my total tax. Will I incur an underpayment penalty even if I pay enough in the last 2 quarters to make up for the higher profit?
How can I avoid the estimated tax penalties and will there be any penalties for my first year?
I tried researching about this but couldn't find any comprehensive guide, so any help will be greatly appreciated...
Thank you.
