When you seek out tax assistance in Des Moines, IA, request guidance in setting forth a schedule for quarterly payments. If you are a sole proprietor, an S-Corp or run an LLC, making quarterly tax payments can simplify your life come tax filing time. Here are five reasons why you should have a plan for keeping up with these payments:
- No surprises: A quarterly tax payment schedule lets you know what to expect when you file your tax returns. By keeping track of your income and expenses all year, and making tax payments as you go, you will have a better idea of what you may owe at filing time. If you do this right, you may even receive a refund! You have to admit that beats facing a large payment and scrambling for the funds to pay it.
- Avoid penalties: When you underpay your estimated quarterly tax payments, you will face a small penalty at filing time. The same is true when you make no quarterly payments. Since you likely do not want to waste money on these unnecessary fees, you can avoid them by making your quarterly payments. That is why it is occasionally advised to pay slightly more than necessary each quarter because it is better to receive a refund than pay a penalty.
- Keeps you on top of your bookkeeping: The only way to be successful with quarterly tax returns is to know your income and expenses. This puts you in a place where denial does not work and you have no choice but to stay connected and aware of your financial situation. Many small business owners tend to run on panic when it comes to finances, which is not sustainable in the long run. Quarterly tax payments are one means of making sure you check in on your financial situation.
- Reduces stress: Tax time will become a routine, rather than a stressful event that mainly involves scrambling for extra funds to pay that one big bill. You will also benefit from keeping more detailed and organized records, which reduces surprises overall. The time put into a quarterly payment plan creates benefits that go beyond your taxes.
- Smaller annual payment: No matter the year-end scenario, paying quarterly taxes reduces your April 15 tax payment. As mentioned, you may get a refund, too, but it is more likely that you will avoid large payments and owe something much more manageable. Small business owners frequently end up under tax pressure because they have no choice but to enter a payment plan or pay taxes late, with more penalties. Between the prepayments and the lack of extra fees, you will enjoy a smaller overall payment.
It is suggested that you put aside 30 percent of your income for quarterly payments. Take that out of your earnings each month and place it in a savings account where you cannot access it until your quarterly reports are due. That way, you remain committed to these payments and their benefits.
If you are looking for quarterly or annual tax assistance in Des Moines, IA, call Accounting & Tax Professionals, PLC and schedule a consultation.