Business Tax Payments: What You Owe and When

Most business owners know they have to pay taxes, but figuring out what you owe and when can feel like solving a puzzle with missing pieces.

After working with 100+ business owners, we see the same confusion: entrepreneurs who understand their business inside and out but get overwhelmed by the different tax payments, deadlines, and penalties. Miss one payment or deadline, and suddenly you’re dealing with interest, penalties, and collection notices.

Here’s what business taxes you actually need to pay and when they’re due.

The Tax Payment Confusion Most Business Owners Face

What It Looks Like: You get notices for taxes you didn’t know you owed. You’re not sure if you should be paying quarterly, monthly, or annually. You’re using business money to pay personal taxes or vice versa.

Why It Happens: Nobody explains that business owners don’t just file taxes once a year—you have ongoing payment obligations throughout the year.

The Cost: Late payment penalties start at 0.5% per month. Miss multiple payments, and you’re looking at thousands in avoidable fees, plus potential collection actions.

Estimated Tax Payments: The Quarterly Surprise

What They Are: Quarterly payments on your expected annual income tax bill, due four times per year.

Who Needs to Pay: If you expect to owe $1,000 or more in taxes when you file your return, you need to make estimated payments.

When They’re Due:

• Q1: January 15th (for October-December income)
• Q2: April 15th (for January-March income)
• Q3: June 15th (for April-May income)
• Q4: September 15th (for June-August income)
• Final: January 15th (for September-December income)

How Much to Pay: Generally 25% of your expected annual tax bill each quarter, or 100% of last year’s tax liability divided by four.

Common Mistakes:

• Waiting until year-end to think about estimated taxes
• Guessing at payment amounts instead of calculating properly
• Missing the irregular due dates (June 15th, not 30th)

Payroll Taxes: The Trust Fund Trap

What They Are: Federal and state taxes withheld from employee paychecks, plus employer matching contributions.

Why They’re Dangerous: These are “trust fund” taxes—money that belongs to your employees and the government, not your business. Using this money for other expenses can trigger personal liability.

When They’re Due:

• Monthly Depositors: 15th of the following month
• Semi-weekly Depositors: Wednesday or Friday, depending on payday
• Quarterly Filers: Last day of the month following the quarter

What You’re Paying:

• Federal income tax withheld from employees
• Social Security and Medicare taxes (employee and employer portions)
• Federal unemployment tax (FUTA)
• State income tax withholding
• State unemployment tax (SUTA)

The Trust Fund Recovery Penalty: If you don’t pay payroll taxes, the IRS can hold business owners personally responsible for the employee portion—even if you have an LLC or corporation.

Sales Tax: State-by-State Headaches

What It Is: Tax collected from customers on taxable sales, then remitted to state and local tax agencies.

Who Needs to Collect: Any business selling taxable goods or services in states that have sales tax.

When It’s Due: Varies by state and sales volume:

• Monthly: High-volume businesses
• Quarterly: Medium-volume businesses
• Annually: Low-volume businesses

Common Problems:

• Not registering for sales tax permits in states where you have sales
• Collecting tax but not remitting it (another trust fund tax situation)
• Not understanding the nexus rules for online sales
• Missing filing deadlines even when you owe $0

Multi-State Nightmare: If you sell in multiple states, each has different rates, rules, and deadlines. E-commerce businesses and contractors working across state lines face the biggest challenges.

What Happens When You Miss These Payments

Estimated Tax Penalties

The Cost: 0.5% per month on the underpayment, plus interest.
Example: Owe $4,000 in estimated taxes but didn’t pay? That’s $20+ per month in penalties, plus compounding interest.

Payroll Tax Consequences

The Cost: 2-15% penalties depending on how late you are, plus personal liability for trust fund portions.
Example: $10,000 in unpaid payroll taxes could cost $1,500+ in penalties within three months.

Sales Tax Problems

The Cost: 5-25% penalties plus interest, potential business license suspension.
Example: Some states can shut down your business or seize assets for unpaid sales tax.

Real Business Example: The Cost of Confusion

The Business: Service company with 5 employees, $800K annual revenue.

What Went Wrong:

• Missed two quarterly estimated payments ($6,000 each)
• Used payroll tax money to cover a cash flow gap
• Didn’t realize they had sales tax obligations in three states

The Damage:

• $1,200 in estimated tax penalties
• $3,500 in payroll tax penalties and interest
• $2,800 in sales tax penalties across three states
• Total: $7,500 in avoidable penalties

The Fix: We got them current on all payments, set up automatic reminders for deadlines, and established separate accounts for tax money.

Simple System to Stay on Track

Set Up Separate Tax Accounts

Keep estimated, payroll, and sales tax money in separate business savings accounts. Don’t touch this money for other expenses.

Use a Tax Calendar

Mark all due dates in your business calendar with automatic reminders. Don’t rely on memory for tax deadlines.

Calculate Payments Properly

• Estimated Taxes: Work with a professional to calculate accurate quarterly amounts
• Payroll Taxes: Use payroll software or services that handle calculations and deposits
• Sales Tax: Set up automatic calculations in your point-of-sale system

Plan for Cash Flow

Tax payments create predictable cash outflows. Plan for these in your monthly cash flow projections.

When to Get Professional Help

Get help if:

• You’ve missed multiple tax payments or deadlines
• You’re not sure what taxes your business owes
• You have employees, but aren’t confident about payroll tax compliance
• You sell in multiple states and don’t understand nexus rules
• You’ve received notices about unpaid business taxes

Red Flags That Need Immediate Attention

Call for help immediately if:

• You’ve used payroll tax money for other business expenses
• You’re behind on multiple quarters of estimated payments
• You’ve received a notice about the Trust Fund Recovery Penalty
• Your business license is threatened due to unpaid sales tax
• You’re facing bank levies or asset seizure

Your Next Step

Business tax payments don’t have to be overwhelming, but they do require a system and professional guidance when you’re not sure what you owe.

Dealing with unpaid business taxes or notices? Visit https://downiesolutions.com or email hello@downiesolutions.com to schedule a consultation. We specialize in getting businesses current on all tax obligations and setting up systems to prevent future problems.

Need tools to stay organized? Check out our https://downiesolutions.com/shop for tax compliance calendars and payment tracking templates.

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Downie Solutions helps business owners stay current on all tax obligations and resolve tax problems before they become crises. Based in Brooklyn, NY, we serve clients nationwide with tax resolution and compliance support.