Starting a business is exciting—until tax season rolls around and you realize no one is automatically withholding taxes from your income anymore. That’s when you might hear about something called estimated taxes—and wonder, Wait… do I have to pay estimated taxes?
The short answer? Probably. But it depends.
If you’re self-employed, freelancing, or running a small business, the IRS expects you to pay taxes throughout the year—not just when you file your return. And if you don’t? You could end up with penalties, interest, and a much bigger tax bill than you expected.
By the end of this, you’ll know exactly what to do (and what to avoid) so tax season doesn’t sneak up on you. Let’s dive in.
What Are Estimated Taxes?
When you’re self-employed, freelancing, or running a business, no employer is withholding taxes from your paycheck. That means the IRS expects you to send in payments throughout the year instead of waiting until tax time.
Estimated tax payments cover:
- Income tax (just like what W-2 employees pay)
- Self-employment tax (aka Social Security and Medicare)
Rather than paying everything in one lump sum when you file your tax return, you make quarterly payments to stay on track.
The catch?
The IRS doesn’t send reminders. There’s no friendly email saying, “Hey, don’t forget your tax payment is due!” If you miss a payment, you could owe penalties and interest.
Who Has to Pay Estimated Taxes?
Not everyone has to make these payments, but if you answer yes to these questions, you probably do:
✔️ Are you self-employed, freelancing, or running a business? (Sole proprietors, LLCs, S-corps, or partnerships)
✔️ Do you expect to owe at least $1,000 in taxes when you file your return?
✔️ Are you earning income that isn’t automatically taxed (like rental income, dividends, stock sales, or side gigs)?
If you work a regular 9-to-5 job with taxes withheld from your paycheck, you’re off the hook. But if you’re your own boss, the IRS expects you to handle this yourself.
Do I Have to Pay Estimated Taxes in My First Year?
It depends on how much you make.
Even in your first year, the IRS expects you to pay estimated taxes if you meet that $1,000 tax liability threshold—but there’s some good news:
- If you don’t make much money your first year and don’t expect to owe at least $1,000 in taxes, you might not need to make estimated payments.
- If you had zero tax liability last year (meaning you didn’t owe anything), the IRS may not penalize you for skipping estimated payments.
Still, it’s better to be safe than sorry. If you’re unsure, setting aside 25–30% of your income for taxes is a smart move.
What Else Do I Need to Do in My First Year of Business?
Since taxes aren’t the only thing you need to figure out in year one, here are a few other must-dos:
- Register Your Business – Whether it’s an LLC, sole proprietorship, or another structure, make sure it’s official.
- Open a Business Bank Account – Keep business and personal expenses separate to make tax time easier.
- Track Your Income & Expenses – Use a tool like QuickBooks or Xero to stay organized (trust us, your future self will thank you).
- Save for Taxes – Set aside at least 25–30% of your income so you’re not scrambling when taxes are due.
How Do I Pay Estimated Taxes?
Paying is pretty simple—you have two options:
1️⃣ Online: The fastest way is through IRS Direct Pay.
2️⃣ By Mail: You can send a check with Form 1040-ES, but mailing takes longer, and if it gets lost, it’s on you to prove you sent it.
When Are Estimated Taxes Due?
Here are the 2025 estimated tax deadlines:
📅 April 15, 2025 (for income earned Jan–March)
📅 June 17, 2025 (for income earned April–May)
📅 September 16, 2025 (for income earned June–August)
📅 January 15, 2026 (for income earned Sept–Dec)
Missed a deadline? Pay ASAP. The longer you wait, the more penalties will stack up.
Next Steps: Get Support Without the High Price Tag
Taxes in your first year don’t have to be overwhelming. Here’s the bottom line:
✔️ If you expect to owe at least $1,000, make estimated tax payments.
✔️ Set aside 25–30% of your income for taxes.
✔️ Track your income & expenses so tax season isn’t a headache.
✔️ Pay on time—April, June, September, and January.
✔️ Not sure where to start? Get professional support (without the high CPA fees).
We know that not every small business owner is ready to hire a full-time accountant, but that doesn’t mean you have to figure things out alone.
At Mahoney CPA, we offer affordable bookkeeping and tax support subscriptions designed for freelancers, sole proprietors, and DIY bookkeepers. Whether you need someone to review your books, flag potential issues, or keep your finances on track with quarterly check-ins, we’ve got you covered.
👉 Explore our bookkeeping subscriptions here
Still not sure which option is right for you? Let’s chat! We’re happy to help you find the best fit for your business.
Simply head over to our Contact Page to get started.
Until next time!
