Tax compliance is one of the most commonly misunderstood (and expensive) aspects of running a small business. The IRS assesses penalties and interest on underpayments and late filings, and state tax agencies are often even more aggressive in collections.
Quarterly estimated taxes, payroll withholding, self-employment tax, and depreciation rules vary significantly based on your business structure and revenue. The calculators below help you estimate obligations, plan payments, and avoid the costly surprises that come from underestimating tax liability.
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Step-by-step workflow
Estimate quarterly tax payments
If you expect to owe $1,000+ in taxes (after withholding and credits), you're required to make quarterly estimated payments. Underpayment penalties start at 3–8% annually. Use the quarterly tax calculator to estimate each payment.
Calculate self-employment tax
If you're self-employed (sole proprietor, partner, or single-member LLC), you'll pay 15.3% self-employment tax on net profit—this covers Social Security and Medicare. It's in addition to income tax, and it's often the biggest surprise for new business owners.
Plan payroll tax withholding
Once you hire employees, you're responsible for withholding federal income tax, FICA, and often state/local taxes from paychecks—plus paying the employer portion of FICA. The payroll tax calculator helps you budget for total payroll tax liability.
Maximize depreciation deductions
Section 179 and bonus depreciation allow you to deduct the full cost of qualifying assets in the year of purchase (up to limits). Use the depreciation calculator to compare immediate expensing vs traditional depreciation schedules.
Federal tax rates and thresholds (2024)
These are federal rates only. Most states also impose income tax, and some cities/counties add local taxes. Always check your specific jurisdiction.
Common mistakes to avoid
Not making quarterly estimated tax payments
If you owe $1,000+ in taxes after withholding, the IRS requires quarterly payments. Missing deadlines triggers penalties of 3–8% annually, compounded quarterly. Set aside 25–30% of profit for taxes each quarter.
Forgetting self-employment tax
New business owners often budget only for income tax and forget the 15.3% self-employment tax on net profit. On $100K profit, that's $15,300 before income tax even starts.
Misclassifying expenses vs capital assets
Assets over certain thresholds must be depreciated over multiple years—unless you use Section 179 or bonus depreciation. Knowing the rules saves taxes: immediate deductions are almost always better than depreciation schedules.
Key financial considerations
- → If you expect to owe $1,000+ in taxes, make quarterly estimated payments by April 15, June 15, Sept 15, and Jan 15—or face 3–8% annual penalty.
- → Self-employment tax is 15.3% of net profit (Social Security 12.4% + Medicare 2.9%)—this is in addition to income tax and often surprises new business owners.
- → Payroll taxes must be deposited on strict schedules: semi-weekly or monthly depending on total liability. Missing deposits triggers 2–10% penalties.
- → Section 179 and bonus depreciation let you deduct the full cost of qualifying assets immediately (up to $1.22M in 2024)—almost always better than multi-year depreciation.
- → Set aside 25–30% of profit each quarter for taxes. It's easier to save as you earn than scramble to pay a large bill at filing time.