Is Your Business Ready for Q3 Estimated Taxes?

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For many small business owners, tax season doesn’t end in April, it returns every few months in the form of estimated tax payments. As Q3’s deadline (September 16, 2025) approaches, it’s worth asking: is your business prepared?

Firms like Prado Tax Services in San Leandro work with business owners year-round to help them stay on top of these quarterly obligations, avoiding penalties and managing cash flow more effectively. Whether you’re a sole proprietor, freelancer, or run a growing LLC, staying ahead of estimated taxes can help you avoid penalties and manage cash flow more effectively.

Who Needs to Pay Estimated Taxes?

If you expect to owe at least $1,000 in taxes this year, and your income isn’t subject to withholding, you’re generally required to make quarterly estimated payments. This includes:

Self-employed individuals
S-Corporation shareholders
Partners in partnerships
Gig workers and freelancers

California has its own estimated tax rules through the Franchise Tax Board (FTB), and business owners here must stay compliant with both federal and state requirements.

Why Q3 Matters

The third quarterly payment, due mid-September, can sneak up on businesses that experienced a mid-year income jump. Perhaps sales picked up in summer, or you landed a new contract that changed your earnings forecast. Q3 is a critical moment to adjust your estimates and avoid underpaying.

Unlike regular employees whose taxes are withheld throughout the year, business owners must proactively calculate and remit their own share of:

Federal income tax
Self-employment tax (Social Security & Medicare)
State income tax (for California-based businesses)

Common Mistakes to Avoid

1. Using Last Year’s Income as a Guide (Blindly):

Safe harbor rules allow you to avoid penalties if you pay 100% (or 110% for higher incomes) of last year’s tax liability in four equal installments. But if your business is growing rapidly, relying on last year’s numbers may leave you short, and facing an unexpected tax bill.

2. Forgetting California’s Different Schedule:
While the IRS splits quarterly payments evenly, California uses a front-loaded system:

30% due by April 15, 2025
40% by June 16, 2025
0% by September 15, 2025
30% by January 15, 2026

While California doesn’t require an estimated tax payment for Q3, your federal payment is still due by September 16.

3. Missing Deductions That Could Lower Payments:

Business expenses like equipment, home office use, mileage, and retirement contributions can reduce your taxable income. Failing to include these in your estimates means overpaying now and waiting for a refund later.

4. Skipping Payments During a Cash Crunch:

Skipping a quarter to preserve cash may seem harmless, but it often triggers IRS penalties and interest. If cash flow is tight, consider adjusting expenses or discussing installment options with a tax professional.

How to Prepare for Q3

Update Your Bookkeeping: Make sure your records are up to date through August so you can project Q3 income accurately.

Calculate Profit, Not Just Revenue: Focus on taxable income after expenses.
Use IRS Form 1040-ES and California Form 540-ES to submit your payments.
Pay Online for Speed and Tracking: Use the IRS Direct Pay tool or FTB Web Pay for businesses.

Consider a Tax Professional’s Help

Even with software and templates, estimating quarterly taxes correctly can be tricky, especially if your income is inconsistent or you’re new to business ownership. Working with a qualified tax preparer or accountant can ensure your estimates are accurate and that you’re capturing all eligible deductions.

Prado Tax Services, based in San Leandro, CA, works with local business owners year-round to monitor income trends, update tax projections, and avoid surprises. Having a trusted advisor makes quarterly payments more manageable, and less stressful.

Final Thought

Q3 estimated taxes may not have the same urgency as April 15, but they carry real consequences if ignored. Set aside some time this month to check your numbers, assess your earnings, and make your payment on time. Staying on top of quarterly taxes keeps your business compliant, and your finances healthier in the long run.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. The content is based on publicly available information and general guidance as of the date of publication. Tax laws and agency procedures can change. For personalized assistance, please consult a licensed tax professional or advisor.

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