One of the more common issues influencers and streamers encounter as their business grows is quarterly taxes. While paying taxes is a requirement for doing business in the United States, many people may not realize their services or work may require them to pay these types of taxes.
If you do not know whether you must pay quarterly taxes, the guide below will go over everything you should know about these taxes and your obligations.
What Exactly Are Quarterly Taxes?
Quarterly taxes refer to estimates you pay annually on income where taxes were not automatically withheld. This often includes income from dividends, gains, and interests and the sale of assets, awards, and prizes.
These taxes are paid every three months or quarter-year and are paid in advance of annual tax returns. They also represent a close estimation of a quarter of a person’s yearly taxes.
Who Needs To Pay Quarterly Taxes?
It is important to also note that these quarterly taxes only apply to certain businesses and specific situations. For instance, if a business fits into one of the below categories they may be required to pay these taxes:
- Sole proprietors
- S-Corporations shareholders
If you work as a sole proprietor, independent contractor, partner in a business, or run your own business, even part-time, you are generally considered self-employed.
However, if you are unsure if your streaming or influencing business fits into one of these categories, consider consulting with an accounting professional to help you with your accounting decisions and determine what types of taxes you may owe.
What Happens if You Do Not Pay Quarterly Taxes?
According to the Internal Revenue Service (IRS), if you do not pay enough taxes through estimated tax payments, you may be charged a penalty. The IRS may also charge you a penalty if your estimated tax payments are late, even if you are due for a refund when you file your tax return.
How Do You Calculate Your Quarterly Taxes?
In general, various methods can be used to calculate your quarterly estimate taxes.
Past Year Annual Income
One of the easiest ways to calculate estimated taxes is based on your past year’s annual income. However, this method best applies if you are sure your business will earn the same income as the previous year or to businesses with consistent long-term or fixed incomes.
Business’s Quarterly Income
The other method of calculating quarterly taxes is based on your business’s quarterly income. This method usually applies to businesses and startups that have varying annual incomes.
However, because of the complicated calculations usually involved with calculating quarterly income, to avoid making costly errors, consider discussing these taxes with an experienced accountant that can perform these calculations on your behalf.
Learn More About Quarterly Taxes By Contacting Ardent Guardian Today
If you want to know whether you must pay quarterly taxes or how this process works, contact Ardent Guardian today or call us at 703-592-6774 to talk to our team.
At Ardent Guardian, as a Certified Financial Planner, CPA, and lawyer, we can help you with all of your business, financial, and legal issues, ensuring that your taxes are prepared accurately and tax time is easier for you and your growing business.