Avoid IRS Penalties!
Pest Control Operators – Failure to Keep up with Estimated Tax Payments Can Create Cash Flow Problems as Well as the Potential for Punishing IRS Penalties. You need to make estimated tax payments if your income tax withholding will not fully cover next year’s tax liability. This applies mostly to self-employed people and investors. You need to make estimated tax payments at least every three months. This is because your income tax withholding if you had a day job may not be sufficient to pay your state or federal income tax in full by the end of the year. There will be penalties if at least 90% of the current year tax or 100% of the prior year tax is not paid in ratably throughout the year.
To avoid any IRS penalties you must figure your estimated tax payments using these simple steps.
- Get out your most recent tax return.
- Look at two crucial lines on your tax return: your total tax and your withholding. Subtract the two figures. Total tax minus withholding. The result is your unfunded tax liability.
- Divide this figure by four
- Make your payments at least every three months. Estimated tax payments are due by April 15th, June 15th, September 15th, and January 15th.
If you are self-employed, don’t forget to estimate both your regular income tax and your self-employment tax. For More tips on IRS Tax laws and how your business may be affected, check out our article PCO Bookkeeper’s Tax Tips: Ouch! The IRS Can Disallow Certain Deductions during an Audit and T&E Is Where You Can Really Get Hurt!
For more information about how to keep your business taxes organized and accounting and bookkeeping advice on preventing a IRS audit, contact PCO Bookkeepers, the pest control industry’s most trusted accounting and bookkeeping consulting firm!