New LLC - How do I estimate quarterly taxes if I'm not sure I'm going to make a profit by the end of the year


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My wife and I are partner members in a newly created LLC. Weve made some money this quarter yet have made no distributions but we are uncertain of our future profits/loss for the year. This quarter I'm making a profit, but unfortunately the business is taking off slow and we are uncertain we will make a profit for the next quarters and may end the year in a loss.

Can you give any tips on quarterly payments considering this scenario?

LLC

asked May 3 '13 at 00:10
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Keith
1 point
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2 Answers


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My earnest recommendation is to get software similar to HR Block or Turbo Tax, and have it calculate it for you. I can tell you that in the US, the quarterly tax payment dates are well known so you'll have plenty of time to send your payment in. You don't need to estimate profit for the entire year, only record your earnings every quarter, calculate your profit, then use the software or diy at your own risk to find out how much you will owe, and send the payment in every quarter. This should keep you up to date so that by the end of the year (consequently the last quarter) you shouldn't have an overly large bill due to no payments in the last three quarters.

You also have the option of just recording the profit distribution for the entire year, and just claiming the profit as personal income: LLCs have this benefit (Schedule C with your 1040). Also, reporting losses also helps as you'll might be entitled to a refund, depending on what you paid total that year.

answered May 4 '13 at 04:30
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Md Moore313
290 points

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You are not required to make estimated tax payments. Rather you just pay a small penalty at the end of the year which is worth it for many start ups since it keeps your cashflow free.

answered Dec 1 '13 at 04:31
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John Rice
1 point
  • Many are flagging this as invalid advice - can you point to a relevant source that substantiates your claim? – Jim Galley 7 years ago

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