As a business owner, you’re subject to some taxes that are not withheld automatically through payroll deductions. In order to meet the IRS’s standards when the new tax year rolls around, you’ll need to calculate estimated business income taxes as well as self-employment tax. There are a few different ways you can do this. What You Should Know Before you begin, there are a few things you’ll need to figure out:
  • Your estimated business income for the tax year
  • Your estimated business expenses for the tax year
  • Your personal tax situation (income, deductions, credits, exemptions, etc.)
These can be determined based on income and expenses from the previous year, or by projecting current year-to-date income and expenses for the rest of the year. What You Can Do There are a few different options for calculating your estimated taxes based on this information:
  • Ask your tax preparer to run an estimate
  • Use the IRS estimated tax calculation worksheet on Form 1040-ES
  • To calculate self-employment taxes, use Schedule SE
Stay on top of your business taxes and you’ll save yourself and your business a lot of stress down the road! Remember, you can always talk to your tax preparer if you have questions or need more help calculating your estimated taxes for your business.