Posted on: 26 July 2017
If you've been in business for more than a year or two, you may find yourself dreading four distinct dates each year--the days your required estimated taxes are due. Unfortunately, even for businesses that withhold FICA deductions from employee wages, estimated tax payments can be a part of life; and if you're relying on your monthly cash flow to meet your overhead expenses, it can be easy to find yourself in a tax hole and struggling to pay your existing obligations. Read on to learn more about managing your business's cash flow to take the sting out of required estimated tax payments.
Pay Yourself (Or the IRS) First
One mantra of personal finance gurus is to "pay yourself first"--that is, transfer money into a savings account or other relatively inaccessible place before it can be spent.
The same principle can hold true when it comes to setting aside funds for your estimated taxes. If you're able to shave a certain percentage off the top of each transaction and transfer it to a separate holding account (preferably one that tends to be "out of sight, out of mind"), you'll be able to accumulate a substantial balance without being tempted to direct these funds elsewhere.
Get An Accountant
If you rely on a tax preparer to do your end-of-year tax returns but have been tackling estimated tax payments yourself, it may be time to enlist your accountant's help on a year-round basis. Not only can your accountant accurately calculate your estimated taxes owed and make any adjustments as your business's income and deductions fluctuate, he or she can work with you to ensure you're putting plenty aside to avoid any trouble with the IRS or your state's department of revenue.
Even if you're one of the rare business owners who enjoys doing your taxes on your own, having an extra expert opinion, like that of Universal Accounting and Financial Services, Inc, can help you from falling too far behind when it comes to your required tax payments.
Request Extensions Early
If you suspect you'll need a bit of extra time to come up with the funds you'll need to make your tax payment, you should be able to seek an extension from the IRS--but you'll need to start early. Waiting until you've already missed a payment or the due date is drawing near could subject you to fines and penalties, putting you even farther behind the 8 ball. On the other hand, starting early can save you money.Share