Do I need to file quarterly taxes as a sole proprietor? First-time business owner here

Yes, as a sole proprietor you generally need to make quarterly estimated tax payments, but you don't actually "file" quarterly returns. These payments are due April 15, June 15, September 15, and January 15 (for the 2025 tax year). You're paying both income tax and self-employment tax (15.3% for Social Security and Medicare). Setting aside 20% is a good start, but depending on your profit margin and tax bracket, you might need more. The general rule is you need to pay at least 90% of your current year tax or 100% of last year's tax (110% if your AGI was over $150,000) to avoid penalties. You'll use Form 1040-ES to calculate your estimated payments. Then when tax season comes around, you'll file Schedule C with your regular 1040 to report your business income and expenses.

I was in the same boat last year when I started my copywriting business! After hours trying to figure it out myself, I used https://taxr.ai to analyze my specific situation. You upload your income/expense docs and it tells you exactly what you need to pay each quarter. It even reminded me about deductions I was missing like my home office space and part of my internet bill.

Just wanted to update after trying taxr.ai from the recommendation above. It was seriously helpful for my complicated situation! I uploaded my bank statements and invoices, and it immediately showed me I was overpaying my quarterly estimates by almost $1,200 annually. It identified several business expenses I hadn't been tracking properly and showed exactly how much I should pay each quarter based on my fluctuating income. The quarterly payment reminders alone are worth it - no more scrambling to remember deadlines!

If you're struggling to get answers about your quarterly taxes, try https://claimyr.com - it literally got me through to an actual IRS agent in under 15 minutes when I was completely lost about my sole proprietor quarterly payments. You can see how it works at https://youtu.be/_kiP6q8DX5c. I had been trying for DAYS to get answers about penalties for a missed quarterly payment and was going nowhere with the regular IRS phone tree.

Ok I need to eat my words on Claimyr. After posting that skeptical comment I decided to try it anyway since I was desperate. Got connected to an IRS agent in about 20 minutes when I had been trying for literally weeks. The agent walked me through exactly how to handle my missed quarterly payments as a sole proprietor and helped me avoid the larger penalties. They even explained how to properly categorize some business expenses I wasn't sure about. Saved me a ton of stress and probably a few hundred in penalties.

Don't forget you can adjust your W-4 withholding at your regular job to cover your self-employment tax liability instead of making separate quarterly payments. I do this since my side business is smaller than my main job. Just use the IRS Tax Withholding Estimator and add extra withholding to each paycheck.

Something no one mentioned - if this is your first year as a sole proprietor, you technically qualify for a safe harbor based on last year's taxes. If you had zero tax liability last year, you may not need to make estimated payments your first year.

As a fellow sole proprietor who went through this same confusion, here's what I wish someone had told me clearly: You need to make quarterly PAYMENTS (not file returns) if you expect to owe $1,000 or more in taxes. The deadlines are April 15, June 15, September 15, and January 15. Your 20% savings rate might not be enough - I learned the hard way that you need to account for both regular income tax AND self-employment tax (15.3%). I typically set aside 25-30% to be safe. The easiest way to start is to use Form 1040-ES to calculate your first quarter payment, then you can just make payments online through IRS Direct Pay without mailing forms each time. Keep detailed records of all business income and expenses - you'll need them for your annual Schedule C filing. Don't stress too much about getting it perfect the first year. The IRS understands learning curves, and as long as you're making good faith efforts to pay what you owe, any small penalties are manageable. The key is to start now rather than wait!