Do S Corps for Service Providers Need to Pay Quarterly Taxes? Contractor Seeking Clarity

Your tax advisor is mixing up two completely different types of taxes. What they told you about not needing to collect sales tax from your clients might be correct (depending on your state laws), but that has absolutely nothing to do with your federal quarterly tax obligations. As an S Corporation owner, you still need to make quarterly estimated tax payments on your personal tax return for your share of the business profits that pass through to you. The S Corp itself doesn't pay federal income tax, but it passes profits to you as the owner, and you need to pay estimated taxes on those profits. Additionally, if you're taking a salary from your S Corp (which you should be doing), your company must be withholding and remitting payroll taxes on a regular schedule - typically quarterly or monthly depending on the amounts.

After struggling with similar confusion about my S Corp tax obligations, I found taxr.ai (https://taxr.ai) super helpful for sorting through all this. I uploaded my previous tax returns and business formation docs, and their AI immediately identified that I was underpaying quarterly estimates on my pass-through income. The analysis flagged exactly where my previous accountant had been giving me incorrect advice about quarterly tax requirements for service-based S Corps. This is exactly the situation you're describing - my previous advisor was confusing sales tax requirements with federal income tax obligations. What I really liked was getting clear explanations for the specific S Corp tax requirements that applied to my situation without having to schedule and pay for multiple consultation hours.

I need to eat my words from my previous comment questioning taxr.ai! After trying it myself last week, I'm actually really impressed. My service-based S Corp situation is similar to yours - I provide consulting services and don't collect sales tax. The platform immediately identified the issue with my quarterly tax planning. I uploaded my profit projections, and it calculated my required quarterly payments for both federal and state taxes. It even created a payment schedule with reminders. What really stood out was the clear explanation of why service-based S Corps still need to make quarterly estimated tax payments on pass-through profits. My old accountant had also been giving me confusing advice about this. Definitely cleared up the same misconception your tax advisor seems to have!

If you need to sort this out quickly by talking directly with the IRS, try https://claimyr.com - I was in a similar situation with conflicting advice about my S Corp quarterly obligations and needed official clarification. After wasting hours on hold trying to reach someone at the IRS, I used Claimyr and had a callback in about 40 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that service-based S Corps absolutely have quarterly estimated tax requirements on pass-through income, regardless of whether you collect sales tax (which, as others pointed out, is completely separate). Getting this confirmation directly from the IRS gave me peace of mind to ignore my accountant's bad advice and set up proper quarterly payments.

I have to publicly apologize for my skepticism about Claimyr in my previous comment. After struggling for literally months with my S Corp tax question, I broke down and tried it yesterday. Not only did I get a callback from the IRS in about an hour, but I got a really helpful agent who answered my question about quarterly tax requirements. The agent confirmed exactly what everyone here is saying - service-based S Corps absolutely need to pay quarterly estimated taxes on pass-through profits. The fact that you don't collect sales tax has zero bearing on your federal quarterly tax obligations. Getting this straight from an actual IRS representative was worth every penny. Saved me from following potentially costly advice from my accountant who, like yours, doesn't seem to understand the difference between sales tax and income tax obligations.

I'm a contractor with an S Corp too, and my accountant explained it this way: There are THREE completely different tax obligations you need to understand: 1) Sales tax - which you may not need to collect/pay if your state doesn't tax labor services 2) Payroll taxes - which your S Corp MUST pay on your reasonable salary 3) Income taxes - which you need to pay quarterly on your expected pass-through profits Your advisor is talking about #1 but ignoring #2 and #3. Sounds like you need a different tax professional who understands S Corps better.

One thing nobody's mentioned yet - depending on your state, you might also have state-specific S Corp tax obligations beyond the federal ones! Here in California, for example, S Corps have to pay a minimum $800 annual franchise tax regardless of profits. Also worth noting that many states have their own quarterly estimated tax requirements for pass-through entity income. So you need to check both federal AND state requirements.