Estimated taxes for mid-year self employment first timer Hello,
I left my consulting job in April 2015 to start my own consulting business. I am registered as an LLC, with S-Corp status filed through Form 2553.
I will be running a monthly payroll to cover my reasonable salary and taking the rest, minus expenses, as S-Corp distributions when tax time comes around.
I should be receiving my first income from my business during the first couple weeks of June. I will run payroll at that time and filing Form 941 by the due date, while paying the withholdings (Fed/FICA/SS) through EFTPS, and my state taxes through the state system.
With all of that said, should I also start paying the quarterly taxes, starting June 15, to meet and/or exceed the 110% of safe harbor tax payments, relative to last year's tax amount and my salary from last year?
I just want to make sure I stay out of penalty regarding paying enough taxes up-front, even considering I am running payroll for myself. I expect my income to exceed last year's income and understand that one way to avoid a penalty is to ensure you pay 110% or 100% of your taxes from the previous year, depending on your income from that year.
I understand that by paying the estimated taxes, in addition to my payroll taxes, I am paying more than technically necessary to meet the safe-habor tax payments before April 15, but in the end I'm pretty sure I'll actually owe more because of the S-Corp distributions.
I'd just rather pay more than pay a penalty later.
Thank you! |