A business is typically expected to pay estimated taxes quarterly throughout the fiscal year. Such estimated taxes are due for businesses that will anticipate having a tax bill of at least $500 at the point of filling an annual return. Form 1040 – ES from the IRS will help you determine how much in estimated taxes you should pay. Payments are made to the Federal Government, and in most cases (depending on the state tax laws) to the state as well.

        With the potential of facing IRS penalties, it is important to pay such quarterly estimated taxes on time or request an extension in advance of the due date. To calculate your tax bill you need to consider the following options. You will be expected to pay:

• 90 % of the overall tax that you will owe
• Or 100 % of last year’s tax figure (110% if the total income is over $150,000 )
• Or annualize based on the previous quarters, minus expenses, and then pay at your personal income tax or corporate tax rate

        Your accountant should help you make the decision as to which method of calculation is best for you based on your business entity.