Questions on First-Year Quarterly Taxes Answered

Starting a new business is exciting, but it also comes with new tax responsibilities that can be overwhelming. If you’re launching a business this year, you probably have questions about quarterly estimated taxes. Do you really have to pay them in your first year? When are they due? How much should you pay?

We’ve compiled answers to the most common questions first-year business owners ask. Whether you’re a freelancer, an independent contractor, or a small business owner, this guide walks you through quarterly tax obligations so you can avoid costly penalties.

Quick Navigation

• Do I have to pay quarterly taxes my first year?
• Who needs to pay estimated quarterly taxes?
• When are quarterly tax payments due in 2026?
• How do I calculate my estimated quarterly taxes?
• Can I pay my estimated taxes all at once instead of quarterly?
• How do I pay quarterly taxes for the first time?
• What happens if I don’t pay estimated taxes?
• Should I hire a CPA for my first year?
• Quick answers to more questions

Do I have to pay quarterly taxes my first year?

Yes, in most cases. If you’re self-employed or own a business and expect to owe $1,000 or more in federal taxes, you must make estimated quarterly tax payments even in your first year of business.

When you work as an employee, your employer automatically withholds income taxes from each paycheck. But as a business owner, there is no automatic withholding. That’s why you’re responsible for paying taxes throughout the year and not just during tax season.

However, there are some exceptions. According to the IRS Self-Employed Individuals Tax Center, if you had no tax liability for the prior year and were a U.S. citizen or resident for the entire year, you may not be required to make estimated payments.

Who needs to pay estimated quarterly taxes?

You usually need to pay estimated taxes if:

• You’re self-employed or a freelancer
• You own a sole proprietorship, a partnership, or an S corporation
• You don’t have enough tax withheld from a paycheck
• You expect to owe $1,000 or more when you file your tax return

In short: if taxes aren’t being withheld from your income, the IRS will expect you to pay them throughout the year.

When are quarterly taxes due in 2026?

Quarterly estimated tax payments are due four times per year, with specific deadlines for each payment period.

For tax year 2026, the quarterly tax due dates are:

• April 15, 2026—1st quarter
• June 15, 2026—2nd quarter
• September 15, 2026—3rd quarter
• January 15, 2027—4th quarter

It’s important to note that if the due date falls on a weekend or legal holiday, the deadline moves to the next business day. Also, keep in mind that the Q4 payment for 2026 income isn’t due until January 15, 2027.

The IRS begins charging penalties, late fees, and interest immediately after each missed due date, so it’s imperative to set up reminders to stay on track. Many business owners who are new to quarterly taxes find it helpful to work with a CPA to ensure they meet all deadlines correctly.

How do I calculate my estimated quarterly taxes?

Calculating quarterly estimated taxes means estimating your annual income, calculating your tax liability, and dividing by four.

A simple approach looks like this:

1. Estimate your total income for the year.
2. Subtract expected business expenses and deductions.
3. Estimate your total tax liability (income tax + self-employment tax, if applicable).
4. Divide that amount by four.

Remember that if your income varies from quarter to quarter, you can recalculate your estimated taxes each quarter based on your true year-to-date income instead of dividing everything evenly.

The IRS provides Form 1040-ES with directions that walk you through this calculation.

Can I pay estimated taxes all at once instead of quarterly?

Yes, you can make one lump-sum payment by the first quarterly deadline (April 15) to cover your entire year’s estimated taxes. The IRS doesn’t require you to spread payments across all four quarters, but it does require that you pay enough throughout the year to avoid underpayment penalties.

Advantages of paying all at once:

• It’s simple: one payment and you’re done.
• There is no need to track multiple quarterly deadlines.
• It ensures you meet requirements early.

Disadvantages:

• There is a big cash outlay in April.
• There is no flexibility to adjust if your income is lower than you expected.
• If you overpay significantly, you won’t get that money back until you file your return.

How do I pay quarterly taxes for the first time?

The IRS offers several ways to pay your estimated taxes, including IRS Direct Pay, EFTPS (Electronic Federal Tax Payment System), or mailing in payment vouchers with Form 1040-ES.

What happens if I don’t pay estimated taxes my first year?

If you don’t pay estimated taxes when required, you’ll face underpayment penalties and interest charges—even if you pay the full amount when you file your annual return.

The Underpayment Penalty

The IRS charges a penalty for not paying enough tax throughout the year. The penalty is calculated based on how much you underpaid, for how long you underpaid, and the IRS penalty rate (federal short-term rate plus 3 percentage points, currently around 8% annually). The penalty compounds daily.

Example: If you owed $12,000 in quarterly payments but paid nothing until filing your return, you could face $500–⁠$800 in penalties plus interest charges.

How to Avoid Penalties: The Safe Harbor Rule

The IRS offers “safe harbor” protection from penalties if you meet one of these thresholds:

• Pay 100% of your prior year’s total tax liability (110% if adjusted gross income exceeded $150,000)
• Pay 90% of your current year’s actual tax liability

Why this matters for first-year business owners: If you had little or no tax liability last year (maybe you were a student or employee with full withholding), the prior year’s safe harbor might mean you owe zero in estimated payments for your first year without penalty—even if your business is profitable. You’ll still owe the taxes when you file your return, but you won’t face penalties.

First-Time Penalty Abatement

The IRS may waive penalties if you haven’t had penalties in the prior three years, filed all required returns, and paid or arranged to pay any tax owed. First-year business owners who were previously employees often qualify.

The bottom line: Making quarterly payments—even if they’re estimates that turn out to be wrong—shows good faith and often prevents penalties entirely.

Should I hire a CPA for my first year of quarterly taxes?

For most first-year business owners, working with a CPA provides significant value that far exceeds the cost.

When You Should Definitely Hire a CPA

• Multiple income sources (W-2 job + side business, investment income)
• Business structure complexity (S-Corps, partnerships, multi-member LLCs)
• Significant revenue (gross income over $75,000-$100,000)
• High deduction opportunity (home office, vehicle, equipment, travel)
• State tax complexity or previous IRS issues

What a CPA Provides in Your First Year:

Tax Planning & Accuracy

• Accurate quarterly payment calculations (federal and state)
• Identification of all available deductions
• Business structure optimization (LLC vs. S-Corp considerations)
• Retirement account recommendations to reduce taxable income

Penalty Avoidance & Representation

• Ensure you meet safe harbor thresholds.
• Avoid underpayment penalties and interest charges.
• Obtain IRS representation if questions arise.
• Request penalty abatement when you qualify.

Year-Round Support

As we discuss in our blog post about how CPAs help your business outside of tax season, ongoing CPA relationships provide quarterly financial reviews, proactive tax-saving recommendations, cash flow analysis, and business growth planning.

Quick Answers to More Common Questions

What is the $1,000 threshold for quarterly taxes?

The IRS requires quarterly payments if you expect to owe $1,000 or more in federal taxes after subtracting withholding and credits. This includes both income tax and self-employment tax (15.3% on net business income).

What forms do I need?

Use Form 1040-ES for quarterly payments. When filing your annual return, you’ll need Schedule C (business profit/loss) and Schedule SE (self-employment tax). Your quarterly payments are credited against your annual tax liability on Form 1040.

What if my income fluctuates throughout the year?

You can use the “annualized income installment method” (Form 2210) to calculate different payment amounts for each quarter based on when you actually earned income. This prevents penalties if you had low income early in the year but high income later.

Do quarterly payments count toward my annual return?

Yes. Your quarterly payments are credits that reduce what you owe when you file your annual return. If you overpaid through quarterly payments, you’ll receive a refund. You still must file your annual return by April 15, even if you’ve already paid through quarterly installments.

Can I get a penalty waiver as a first-year business owner?

Yes. The IRS offers “first-time penalty abatement” if you haven’t had penalties in the prior three years and have filed all required returns. You may also qualify for penalty relief under the safe harbor rule if you had minimal tax liability last year.

About Cukierski & Associates

At Cukierski & Associates, we’ve been helping businesses in Arlington Heights and throughout the Chicagoland area navigate their tax obligations for over 40 years. Our experienced CPAs understand that quarterly estimated taxes are just one piece of building a successful business.

Contact us today to schedule a consultation with one of our experienced CPAs. Let’s work together to build a tax strategy that supports your business success.