If I started a sole proprietorship this year... can I pay taxes all at the end of the year?

[BAF2]

Hello, 

If I started a sole proprietorship, can I wait until I file my personal taxes to pay tax on the earnings, or should I be filing/setting aside taxes ahead of that? 

Thanks!

[NateTheGrEAt]

Hello @BAF2  - thanks for your question!

As a self-employed person, it is always prudent to make quarterly payments of estimated tax. For one, this reduces your tax balance at the end of the year so you don't have a huge bill to pay. Additionally, if you owe more than $1000 on your Federal tax balance when you file your return, there is the possibility of being assessed an underpayment penalty. The IRS system is designed to be "pay as you go" - you are supposed to pay taxes as the income is earned. 

I hope this information is helpful!