Posted by u/surprise_tax_bill_hurt
How much do I set aside for quarterly taxes?
Answered by Ask a Shop Owner ·
Got hit with $18k in taxes I did not save for. How do I not do this again?
u/askashopowner Owner-business owner advisor
Top answer
Rule of thumb: 25% to 30% of net profit into a separate savings account every time you get paid. Do it automatically. That covers federal income tax, self-employment tax (if you are an LLC/sole prop), and most states.
Pay quarterly on 4/15, 6/15, 9/15, and 1/15. Underpayment penalties are small but they compound, and paying quarterly also forces you to actually calculate your income four times a year instead of getting a spring surprise.
If you are S-corp with a W-2 salary, withhold from your paycheck like a normal employee. Only quarterly on the distribution portion. Your payroll service will help set this up.
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