Quarterly taxes are prepayments made throughout the year that contribute towards your annual tax liability. This approach helps manage the financial impact of taxes by spreading the payments over several months.

If your S Corp turns a profit—that is, your earnings exceed your expenditures—the IRS and some state authorities require that these taxes be paid incrementally throughout the year rather than in one lump sum at the end of the tax year. This method helps avoid a large due amount at tax time and ensures smoother financial management.

Failing to meet quarterly tax obligations can lead to penalties and interest charges on the due balance when you eventually file your taxes. It's important to stay on top of these payments to avoid unnecessary fees.

When tax season arrives, you'll file your individual taxes and calculate your total annual tax liability. The quarterly payments you've made will be credited against this total. The remainder, if any, is due by April 15th unless you file for an extension.

Your final tax amount—or your refund—is essentially your total tax liability minus the taxes you've already paid throughout the year. This includes both your quarterly tax payments and any taxes withheld from your W-2 wages.

The taxes withheld from your salary are crucial for covering the tax obligations on your S Corp salary but do not automatically cover taxes due on S Corp profits. Therefore, quarterly taxes are essential for addressing this aspect, ensuring you are covering your tax responsibilities throughout the year.

As a member of Collective, you don’t need to worry about calculating your quarterly payments—we handle that for you. We'll send you quarterly tax estimates to pay to the IRS and your state, ensuring you're always on track.

Once you complete your onboarding with Collective, we will begin sending you quarterly tax estimates. We differ from other firms by running a Profit & Loss report for your business each quarter, giving you an estimate that accurately reflects your current financial situation and adjusting as your income changes.

If the next quarterly payment deadline (April 15th, June 15th, September 15th, or January 15th) is less than 15 days away when you complete your onboarding, please use the provided links to manually calculate your upcoming tax payment. Don't worry—after this, Collective will automatically send you quarterly payment instructions.

By understanding and managing your quarterly taxes effectively, you can ensure a more predictable financial landscape for your business. If you have any questions or need assistance, Collective is here to help guide you every step of the way.

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as financial or tax advice. It is not intended to be a substitute for obtaining accounting or other financial advice from an appropriate financial adviser or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.