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Staying on Top of Your Tax Payments When You’re Self Employed

Cypress Wealth Services

September 2022

Being your own boss certainly has its rewards. Entrepreneurs and real estate brokers have the ability to manage their own schedules and have great income-earning potential. But as you get wrapped up in the day-to-day, it can be easy to forget to track your earnings and make estimated tax payments on a regular basis.

Proactive tax management is a must if you want to stay on top of your finances. Here are five steps you can take to manage and reduce taxes as an entrepreneur or real estate broker.

1. Understand When Estimated Tax Payments Are Due

Self-employed individuals, entrepreneurs, and real estate brokers are responsible for paying taxes directly to the IRS in the form of quarterly estimated payments. Since an employer isn’t deducting taxes automatically for you, you have to calculate and remit payment for what you owe.

This is great in that you don’t have to pay taxes right away, but it can quickly become an administrative and financial burden if you don’t stay on top of it.

To better manage your tax payments, you must first understand when they are due. This table highlights the typical due dates for quarterly estimated tax payments:(*1)

Taxes are due on…

…for money earned…

April 15

January 1 – March 31

June 15

April 1 – May 31

September 15

June 1 – August 31

January 15 of the following year

September 1 – December 31

Failure to pay your estimated taxes or late payment may result in hefty penalties and fees charged by the IRS, so it’s critical to stay on top of these dates.

2. Understand How Much You Should Pay

Understanding how much you should pay in taxes can be especially difficult if your income fluctuates each year. If you overpay, you run the risk of giving the IRS an interest-free loan, and if you underpay, you run the risk of being penalized. In this case, the safest thing to do is to avoid the underpayment penalty by paying the lesser of:(*2)

  1. 90% of your current year tax liability or
  2. 100% of your prior year tax liability (if your adjusted gross income for the prior year was more than $150,000, then you must pay 110% of your prior tax liability)

Keep in mind that the IRS also provides a stipulation if you receive uneven income throughout the year. You may be able to reduce or avoid penalties by annualizing your income and making unequal payments throughout the year.(*3)

3. Create a Tax Plan

After you determine how much tax you should pay, the next step is to create a tax plan to ensure you save the appropriate amount. The general rule of thumb is for self-employed individuals set aside 25-30% of their income for taxes,(*4)  but the exact amount you need to set aside depends on your business structure, tax bracket, state of residency, and more.

For individuals with irregular income, it’s important to adjust your savings as your income fluctuates. If you have a particularly successful month, consider putting 50-60% away to make up for months where your income is lower. Working with a wealth manager or utilizing a bookkeeping system are great ways to stay on top of your tax payments so you don’t find yourself facing a penalty come tax season.

4. Keep Track of Deductions

It’s easy to forget about all the expenses you paid for when you’re focused on managing your irregular income. But it’s important to document as much as you can in order to take advantage of every deduction. This may help you reduce your tax liability, ultimately reducing your estimated tax payments and putting less strain on your uneven cash flow.

There are dozens of expenses you can deduct as an entrepreneur or real estate broker.(*5)  Here are a few of the most common deductions:

  • Startup costs
  • Advertising
  • Online services and subscriptions
  • Travel expenses
  • Continuing education
  • Software, hardware, and other equipment
  • Health insurance premiums and medical care expenses
  • Home office and supplies
  • Retirement contributions

5. Partner With a Professional

Managing your tax payments can be confusing, but with the right professionals by your side, it doesn’t have to be. At Cypress Wealth Services, we strive to help entrepreneurs and real estate brokers manage the uneven income that comes with the job.

Are you feeling overwhelmed or confused as you sort through important tax-planning issues? Rather than going it alone, we want you to experience the comfort and clarity a financial professional can bring. You can reach us by calling 866.888.6563 or contacting one of our offices today.


About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high-net-worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services serves a broad range of client needs using their experience and expertise to act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring the wealth and legacy a person has already built to their loved ones. With financial advisors in Palm Desert, CA, Tustin, CA, Athens, GA, and Anchorage, AK, the firm serves clients across the country with Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit or call 760.834.7250.