Most LA small business owners have to pay quarterly estimated taxes to the IRS and California Franchise Tax Board. Missing these payments leads to penalties — even if you pay the right amount at year-end. This guide is for LA business owners who want to understand, calculate, and pay quarterly estimated taxes correctly.

What quarterly estimated taxes are

The basic idea:

Definition

  • Quarterly payments — to IRS and California
  • Estimated — based on projected income
  • Required — for most self-employed individuals and businesses
  • Four times a year — Apr 15, Jun 15, Sep 15, Jan 15

Quarterly taxes are a real obligation.

Who has to pay

  • Self-employed individuals — typically yes
  • S-corp owners — usually yes
  • C-corp — yes
  • Partnerships — usually yes (owners pay on personal returns)
  • W-2 employees — generally not (employer withholds)

Most business owners pay quarterly.

What happens if you don't

  • Federal penalty — IRS underpayment penalty
  • California penalty — FTB underpayment penalty
  • Interest — on unpaid amounts
  • Compounding — penalties grow

Avoiding penalties is worth the effort.

Why quarterly matters

A few specific reasons:

Cash flow

  • Forced saving — for taxes
  • Avoid year-end surprise — for the tax bill
  • Plan ahead — for the payments
  • Less stress — in April

Quarterly payments reduce year-end stress.

Compliance

  • Required — by federal and state
  • Penalties — for missed payments
  • Interest — on underpayments
  • Cumulative — over multiple quarters

Compliance matters.

Avoiding surprises

  • Build tax reserve — throughout year
  • Estimate accurately — for planning
  • Adjust as needed — for changes
  • Less debt — at tax time

Surprises are worse than planning.

Better financial planning

  • Know your tax burden — throughout year
  • Adjust quarterly — as income changes
  • Plan investments — based on tax position
  • Strategic decisions — with tax awareness

Better information produces better decisions.

Federal quarterly estimated taxes

IRS Form 1040-ES:

When due

  • Q1 — April 15
  • Q2 — June 15
  • Q3 — September 15
  • Q4 — January 15 (of following year)

Quarterly deadlines.

How to calculate

The safe harbor approach:
- Pay 100% of prior year tax — safe harbor
- Or 110% — if AGI over $150K
- Or 90% of current year — projected tax

Safe harbor avoids penalties.

Where to pay

  • IRS Direct Pay — from bank account
  • EFTPS — Electronic Federal Tax Payment System
  • Credit card — with fees
  • Check — with Form 1040-ES voucher

Multiple payment options.

What form

  • Form 1040-ES — for individuals
  • Form 1120-W — for corporations (deprecated but useful)
  • Form 1120 — for C-corps with quarterly estimates

Forms vary by entity.

California quarterly estimated taxes

CA Form 540-ES:

When due

  • Q1 — April 15
  • Q2 — June 15
  • Q3 — September 15
  • Q4 — January 15

Same as federal for individuals.

How to calculate

Similar to federal:
- Pay 100% of prior year tax — safe harbor
- Or 110% — if AGI over certain threshold
- Or 90% of current year — projected

Same logic, California-specific.

Where to pay

  • FTB website — direct payment
  • MyFTB account — for individuals
  • Credit card — with fees
  • Check — with voucher

Multiple options.

Minimum Franchise Tax

For California corporations:
- $800 minimum — annual
- Quarterly payments — of $200
- Regardless of income — for active corporations
- First-year exception — if newly formed

California-specific.

LA-specific considerations

A few things specific to LA:

Local business taxes

  • City of LA — Business Tax
  • Annual renewal — for most businesses
  • Based on gross receipts — for most
  • Quarterly not required — typically annual

City tax is separate from state.

Sales tax

  • California Department of Tax and Fee Administration — sales tax
  • Quarterly or annual — depends on volume
  • Different from income tax — sales tax is on sales
  • Compliance — important for sellers

Sales tax is a separate obligation.

Other California taxes

  • Disability insurance — for self-employed
  • Unemployment insurance — for employers
  • Employment training tax — for some
  • Various local taxes — depending on location

Other obligations exist.

Common quarterly mistakes

A few things to avoid:

Mistake 1: Not paying at all

  • Avoidance — doesn't work
  • Penalties — compound
  • Stress — at year-end
  • Cash flow shock — when due

Pay quarterly, even if estimated.

Mistake 2: Paying too little

  • Underpayment penalty — applies
  • Safe harbor missed — if under
  • Cumulative — over multiple quarters
  • Worse than overpaying — usually

Pay enough to meet safe harbor.

Mistake 3: Paying too much

  • Cash flow drag — unnecessarily
  • Opportunity cost — of money tied up
  • Refund at year-end — not ideal
  • Better to be close — to actual

Don't overpay significantly.

Mistake 4: Missing deadlines

  • Penalty — even if you pay soon after
  • Quarterly deadlines — strict
  • Weekends and holidays — push to next business day
  • Plan ahead — for deadlines

Mark your calendar.

Mistake 5: Not adjusting estimates

  • Big changes — in income
  • Mid-year adjustments — needed
  • Better than waiting — for year-end
  • Quarterly recalculation — for accuracy

Adjust estimates as needed.

How to calculate your estimates

A practical approach:

Start with prior year

  • Prior year total tax — from return
  • Divide by 4 — for quarterly amount
  • Adjust up 10% — if income growing
  • This is safe harbor — if accurate

Simplest approach.

Project current year

  • Run P&L — through end of last quarter
  • Project to year-end — based on trends
  • Calculate tax — on projected income
  • Subtract paid — to date
  • Divide remaining — into next payments

More accurate, more work.

Hybrid approach

  • Use prior year safe harbor — for Q1-Q3
  • Project for Q4 — based on actuals
  • Adjust as needed — at year-end
  • Less work — usually

Common compromise.

Working with your accountant

A few practical things:

Discuss approach

  • Safe harbor vs. projection — your choice
  • Tax planning — beyond just estimates
  • Major events — that affect tax
  • Strategy — for tax efficiency

Your accountant helps with strategy.

Provide information

  • Quarterly P&L — current
  • Year-over-year — for comparison
  • Major changes — affecting income
  • Deductions planned — for the year

Information produces better estimates.

Review quarterly

  • Adjust as needed — for changes
  • Plan year-end — based on trajectory
  • Tax planning — for remaining year
  • Avoid surprises — at filing

Quarterly review helps.

Tools and resources

Practical options:

IRS tools

  • IRS Direct Pay — for payments
  • EFTPS — for business payments
  • Tax withholding estimator — for employees
  • Form 1040-ES — worksheet for estimates

Multiple IRS resources.

State tools

  • FTB website — for California
  • MyFTB account — for individuals
  • Form 540-ES — for estimates
  • CDTFA — for sales tax

California-specific resources.

Third-party tools

  • QuickBooks — quarterly tax estimates
  • Xero — similar functionality
  • Tax software — for projections
  • Accountant software — access to your pro

Multiple options.

Cash flow planning

A few practical things:

Set aside tax money

  • Separate account — for taxes
  • Percentage of revenue — based on margin
  • Transfer regularly — weekly or monthly
  • Don't touch — for non-tax expenses

Separate tax money.

Estimate quarterly

  • Realistic projection — based on data
  • Conservative estimate — to avoid underpayment
  • Adjust as needed — for actual results
  • Plan for payment — in cash flow

Estimate based on real data.

Plan for tax payments

  • Mark calendar — for deadlines
  • Have cash ready — before deadline
  • Consider timing — of major income
  • Plan for Q4 — typically largest

Plan ahead.

What we offer

Bookkeepers Los Angeles provides quarterly estimated tax support for LA small business owners — with calculation assistance, payment scheduling, and coordination with your accountant. We help you estimate accurately, plan cash flow, and stay compliant. Free consultations available.

📞 Call (323) 709-8818 or [request a consultation online](https://www.bookkeeperslosangeles.com/contact). Service area: Los Angeles, including downtown, Westside, and San Fernando Valley.