Do S Corps have to pay estimated tax quarterly or is it only the individual owner?

S corporations themselves generally don't pay federal income taxes, but there are some important distinctions to understand. The S corporation doesn't make federal estimated tax payments on business profits because those profits "pass through" to your personal tax return. As the owner, you'll need to make quarterly estimated tax payments on your individual return (Form 1040-ES) based on your anticipated income from the S corp and any other sources. However, if your S corporation has employees (including yourself as an employee-owner), the business is responsible for payroll taxes including Social Security, Medicare, and federal unemployment taxes. The S corp must make timely deposits for these employment taxes. Also, some states do impose entity-level taxes or fees on S corporations regardless of income, so check your state requirements.

I had the exact same question last year when I started my consulting business as an S corp. I was so confused about all the tax requirements and deadlines. I wasted hours trying to figure everything out on the IRS website and got conflicting advice from friends. Then I found https://taxr.ai which analyzes all your business documents and tells you exactly what tax obligations you have and when they're due. It saved me so much stress! It confirmed that my S corp didn't need to make federal estimated tax payments, but I did need to make personal quarterly estimates based on my projected income. It also helped me determine what a "reasonable salary" should be for my industry to avoid IRS scrutiny.

Just wanted to follow up - I decided to try taxr.ai after posting here and I'm actually really impressed! It showed me that while my S corp doesn't pay federal income tax, I still needed to file Form 1120-S annually, plus my state has a small entity tax that applies regardless of income. It also gave me a customized calendar with all the filing deadlines specific to my situation, which was super helpful. Definitely worth checking out if you're new to managing an S corp like I was.

Something that hasn't been mentioned yet - if you need clarification directly from the IRS on your S corp tax obligations, good luck getting through to them by phone! I spent HOURS on hold trying to get answers about estimated taxes for my S corp. I eventually used https://claimyr.com to get a callback from the IRS. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically hold your place in line and call you when an agent is available. Saved me from wasting an entire day on hold.

I have to admit I was completely wrong about Claimyr. After being frustrated with trying to get answers about my S corp tax situation, I gave it a try. Within 2 hours I was talking to an actual IRS representative who walked me through everything. The agent confirmed what others have said here - the S corp itself doesn't make federal estimated tax payments on business profits, but I need to make quarterly estimated payments personally. They also helped me understand how to properly categorize distributions versus salary to avoid red flags. Saved me from making a $3,800 mistake on my quarterlies!

Don't forget that S corps do have to file an annual tax return (Form 1120-S) even though they don't pay federal income tax! That Form 1120-S generates your Schedule K-1, which is what you use to report your share of the business income on your personal return. The 1120-S is due March 15th, which is earlier than personal returns.

Has anyone here had to deal with state estimated taxes for their S corp? I'm in California and the franchise tax board seems to have different rules than the IRS.

Great question! As others have mentioned, S corps are pass-through entities, so the corporation itself doesn't pay federal income tax on profits. However, you'll still need to make quarterly estimated tax payments on your personal return (Form 1040-ES) based on your expected income from the S corp. One thing to keep in mind is that if you're actively working in the business, you're required to pay yourself a reasonable salary through payroll. This salary is subject to payroll taxes (Social Security and Medicare), and you'll need to make regular payroll tax deposits. The remaining profits can then be distributed to you as distributions, which aren't subject to payroll taxes but are still taxable income on your personal return. Also don't forget that your S corp still needs to file Form 1120-S annually by March 15th, even though it doesn't pay federal income tax. This generates your Schedule K-1, which you'll need for your personal tax return. Since this is your first year with an S corp, I'd recommend working with a tax professional to make sure you're handling the reasonable salary requirement correctly - the IRS scrutinizes this closely.

One thing that caught me off guard my first year was the self-employment tax savings aspect of S corps. Unlike sole proprietorships where you pay self-employment tax on all business income, with an S corp you only pay payroll taxes (Social Security/Medicare) on your salary, not on distributions. This can result in significant tax savings, but only if you're paying yourself that "reasonable salary" everyone's mentioned. For quarterly estimated taxes, I use Form 1040-ES and base my payments on my expected total income for the year - both the salary from my S corp and the anticipated distributions. Don't forget to account for any tax withholdings from your S corp salary when calculating how much you need to pay in estimates. Also, since you mentioned this is your first year, make sure you understand the different deadlines: your S corp payroll tax deposits (if you have employees), quarterly personal estimated taxes (4/15, 6/15, 9/15, 1/15), and the annual S corp return (Form 1120-S due 3/15). It can feel overwhelming at first, but once you get into the rhythm it becomes much more manageable!