To pay quarterly taxes as an LLC, estimate your tax liability for the year and submit four payments to the IRS using Form 1040-ES-typically in April, June, September, and January.
LLC owners don’t usually have taxes withheld from their income the way employees do. Instead, they must make estimated tax payments throughout the year. These quarterly payments help cover your income tax and self-employment tax so you’re not hit with a large bill-or penalties-at tax time.
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1. Who Needs to Pay Quarterly Taxes?
The IRS expects individuals-including LLC owners-to pay taxes as they earn income. You are generally required to make quarterly estimated tax payments if:
- You expect to owe at least $1,000 in federal tax for the year, and
- You expect your withholding and refundable credits to be less than 90% of your total tax bill (or 100% of last year’s tax)
This includes most single-member LLCs and multi-member LLCs taxed as partnerships, as well as LLCs taxed as S corporations (for any pass-through income).
2. What Taxes Do Quarterly Payments Cover?
Quarterly estimated taxes typically cover:
- Federal income tax on your share of LLC profits
- Self-employment tax (15.3%) if you’re taxed as a sole proprietor or partner
- Alternative Minimum Tax (AMT) or other special taxes, if applicable
For LLCs taxed as S corporations, the salary portion of your compensation is covered by payroll withholding. However, any profits passed through to you still require estimated tax payments.
3. How to Calculate Your Estimated Taxes
The most accurate way to estimate your quarterly tax is to calculate your expected net income for the year and apply your tax rate to it. Then divide that amount into four equal installments.
You can use IRS Form 1040-ES to help with calculations. This includes a worksheet that walks you through estimating your income, deductions, credits, and tax liability.
Tip: Many small business owners set aside 25% to 30% of their profits for taxes, especially if self-employment tax applies.
4. When Are Quarterly Taxes Due?
Quarterly estimated tax payments are due on the following schedule:
- April 15 – for income earned January 1 to March 31
- June 15 – for income earned April 1 to May 31
- September 15 – for income earned June 1 to August 31
- January 15 (following year) – for income earned September 1 to December 31
If a due date falls on a weekend or holiday, the deadline is extended to the next business day.
5. How to Make Payments
There are several ways to submit your quarterly estimated payments to the IRS:
- Online: Use IRS Direct Pay or the Electronic Federal Tax Payment System (EFTPS)
- By mail: Send a check with Form 1040-ES payment voucher
- With tax software or through a tax professional
Always keep proof of payment and record the confirmation number or check copy for your files.
6. What If You Miss a Payment?
Failing to make timely estimated payments can result in an underpayment penalty, even if you pay your full tax bill by April 15. The penalty is based on how much you underpaid and how long the payment was late.
To avoid penalties:
- Pay at least 90% of your current year’s tax liability, or
- Pay 100% of your previous year’s total tax (110% if your income exceeds $150,000)
If your income fluctuates during the year, you can adjust future payments accordingly to reflect changing profit levels.
7. State Quarterly Taxes May Also Apply
In addition to federal quarterly taxes, many states also require estimated tax payments. These may follow the same schedule or have different deadlines and forms.
Check with your state’s Department of Revenue to understand local requirements. Ignoring state taxes can lead to penalties or loss of good standing for your LLC.
Paying quarterly taxes is a key part of managing an LLC responsibly. While it may seem daunting at first, regular payments help you avoid year-end surprises, reduce penalties, and keep your business in good standing. Set aside money as you earn it, mark deadlines in your calendar, and work with a tax advisor if you need help estimating or submitting payments. Staying ahead of your taxes is good business-and peace of mind.
