Happy Tuesday Folks!
Hope everyone had a great Labor Day and was able to enjoy a along weekend.
As for me, I was able to work on a couple of home projects, spend time with family and watched a lot of college football; my kind of weekend!
This week I’m breaking down the important Q3 quarterly estimated tax payments that need to be made to IRS by 9/15.
I’m also giving you a little bit behind the scences of what I’m working on and what you will see in the coming months. Now that Labor Day has passed its time to lock in for the last four months of the year and crush the rest of Q3 and Q4.
Now, let’s dive on in!
Q3 Quarterly Estimated Taxes Are Due in a Week
If you’re currently self-employed, run an LLC or take owners draw instead of W-2 paycheck, this is for you. It covers income earned from June through August and can sneak up on you quickly if your not paying attention.
Who needs to pay: If you expect to owe over $1,000 or more in tax for the year after subtracting withholding and credits, the IRS expects a payment now, not just in April.
What it covers: Federal income tax plus self employment, which is a 15.3% rate on your self employment earnings.
How to configure your number:
Run your P&L from January to August
Project out what your income will be for the rest of the year
Multiply your net income by your tax rate + the 15.3% self employment
Subtract what you have already paid in Q1 and Q2
The remaining amount is your Q3 payment
Confirm the amount is correct with your Tax professional
It’s super important to confirm that the amount is correct with your tax professional or CPA. Confirming the calculation is correct reduces the risk of underpayment, which could result in underpayment penalties by the IRS.
Honestly, I recommend just having your tax pro handle the calculation from the jump. It’s going to be more accurate and you likely have much better ways to spend your time.
For most CPA and Tax Pro’s, these quarterly calculations usually included with all tax strategy packages so it makes sense to have them handle it.
How to Pay: You can pay immediatly through IRS Direct Pay Online. Here’s the link to the IRS website detailing how these payments can be made
IRS Direct Pay Link: https://www.irs.gov/payments
If you’re reading this and are not sure that your books can give you an accurate quarterly or theyt aren’t just aren’t where they need to be, feel free to reach out! I’m happy to take a look and provide some direction.
What I’m Working On
More Templates and Resource Guides: I’m currently building out several templates and guides that you can use immediately in your business including: job costing calculator, and a financial health scorecard. Be on the lookout for these as they will be coming out in Q4.
Job Costing My Own House Series: I’ve talked about this a little but I currently live in an old farmhouse that’s at the point where its becoming dated and needs some work. I’m not a professional contractor by any means but I know enough that I can do a lot of the work myself.
This gives me an opportunity for me to bid these jobs out as if I was a contractor to myself and see if I can stay in budget. Should be a fun challenge for myself and a great opportunity to job cost in real time.
More on that soon.
Software and App Breakdowns: I’m currently knee deep in software platforms researching and testing out different platforms contractors use. Be on the lookout for breakdowns on these platforms and to see which ones I recommend, and which ones to stay away from. These would not be sponsored by these platforms but they would be my honest take and if its worth contractors investing in these platforms.
Question of the Week
What’s the one software or app that youCouldn’t run your business without?
It could be a business management plaftform like Jobber or ServiceTitan, a CRM, or it could be anything. Let me know, I’m curious what the answers are.
Want More?
Shoot me an email at [email protected] if you have any questions or requests for topics you would like me to write about. I’m all ears and I respond to all emails personally.
Til next time, cheers!
Preston