Yesterday ( June 15th) was the quarterly tax deadline. Joyce Rosenberg wrote a great article highlighting the need of self-employed and small business owners to set aide 30-4% of their income quarterly for tax payments. Below is an excerpt.
Because employees have their taxes withheld from their paychecks, most don’t need to worry about paying the government. But paying taxes is one of the chores on business owners’ to-do list. They’re expected to make quarterly tax payments, known as estimated payments.
Accountants advise business owners to set aside 30 percent to 40 percent of the money they earn to cover their taxes. That can be a hard adjustment for some owners. If they earn $3,000 on a project or from a sale of goods, they really can’t consider all of that money as theirs. If 40 percent of that amount, or $1,200, is allocated to taxes, the owner is left with $1,800.
Berdahl said many owners find it hard to save money for taxes. “People who aren’t budgeting to put the 30 to 40 percent away are using it for operations,” he said. “Come April, they don’t have anything and they have to knock on the bank’s door to pay their taxes.”