If you own a pass-through entity like an S-corp, LLC, partnership, or sole proprietorship, your business income flows through to your personal tax return. Unlike W-2 employees who have taxes withheld each paycheck, you’re responsible for paying taxes throughout the year on your own. That’s where estimated payments come in.

The IRS expects quarterly payments on April 15, June 15, September 15, and January 15 of the following year. New Jersey has its own estimated payment schedule that generally follows the same dates. Miss these deadlines or underpay significantly, and you’ll face penalties and interest.

The amount you owe depends on your projected taxable income for the year. This is where most business owners struggle. If your income varies month to month or you’re having a stronger year than expected, last year’s numbers won’t be accurate. You need current financials to project properly.

This is why keeping your books current matters beyond just knowing your profit. When your books are reconciled and up to date each month, you or your accountant can see what you’ve actually earned year-to-date and project what the full year will look like. That projection drives your estimated payment calculation. Without accurate books, your accountant is guessing.

Most accountants calculate estimates at the start of the year based on prior year numbers or rough projections. That works if your business is predictable. If it’s not, you need to revisit the calculation each quarter with actual numbers. Your accountant can adjust the estimates, but only if they have accurate financials to work from.

The practical approach is a division of labor. Your bookkeeper keeps the books current and provides the financial picture. Your accountant runs the tax projections and tells you what to pay. Budgeting and cash flow forecasting ties it together by making sure you’ve set aside the money before the payment is due.

Beyond the calculation, there’s the cash flow side. A $12,000 quarterly payment due in June doesn’t help if you spent that money in April. Setting aside a percentage of income as it comes in, or at least tracking what you’ll owe, prevents the scramble when payment deadlines hit. Some business owners transfer a fixed percentage of every deposit into a separate tax savings account. Others review projected estimates monthly and adjust as needed.

If you’re consistently surprised by your estimated payment amounts or scrambling to cover them, that’s usually a sign your books aren’t giving you visibility into where you actually stand. Working with fractional CFO and advisory services for small businesses can help you see the full financial picture, plan for tax obligations, and coordinate the numbers with your accountant so everyone is working from the same information.