Quarterly Tax Planning: Why Waiting Until Year-End Costs You Money

Most founders think about taxes once a year—when their CPA calls in March asking for documents. By then, it's too late to do anything meaningful about your tax bill.

Quarterly tax planning changes that.

Instead of reacting to your tax liability after the year ends, you make proactive moves every quarter to minimize taxes and optimize cash flow.

The Problem with Year-End Tax Planning

When you wait until December (or worse, April) to think about taxes:

No time for strategies: Most tax moves require action during the year
Cash flow shock: Large unexpected tax bills strain cash reserves
Missed opportunities: Timing-dependent deductions are lost
Stress: Last-minute scrambling vs. calm planning

What Quarterly Tax Planning Looks Like

Every quarter (typically by month-end), we:

Review YTD financials: Where's your income trending?
Calculate projected tax: What's your estimated annual liability?
Adjust estimated payments: Are you paying enough (or too much)?
Identify tax moves: What strategies can reduce your bill?
Plan owner compensation: Optimize salary vs. distributions

Time commitment: 30-45 minute call + any action items

Real Example: How This Saves Money

Client: Seattle consulting firm

Without quarterly planning (old way):

Year-end profit: $280K
No planning, standard deductions
Tax bill: $89,000
"Surprise" cash flow hit in April

With quarterly planning (our way):

Q1: Realized profits trending high, accelerated equipment purchases ($25K)
Q2: Increased retirement contributions (SEP-IRA, $42K)
Q3: Adjusted estimated payments to avoid underpayment penalty
Q4: Timed year-end expenses strategically
Final tax bill: $71,000
Savings: $18,000

Key Tax Strategies We Review Quarterly

1. Retirement Contributions

SEP-IRA (up to $66K for 2024)
Solo 401(k) (up to $69K for 2024)
Timing: can be made until tax deadline, but better to plan ahead

2. Equipment & Asset Purchases

Section 179 deduction (up to $1.16M in 2024)
Bonus depreciation
Timing: must be placed in service by Dec 31

3. Owner Compensation

S-Corp salary adjustments
Distribution timing
Estimated tax payment adjustments

4. Business Expenses

Prepaying expenses (insurance, software, etc.)
Year-end inventory decisions
Travel and conference timing

5. Entity Structure

S-Corp election timing (March 15 deadline)
Multi-entity strategies for real estate or side businesses

Estimated Tax Payments: Getting Them Right

The IRS requires quarterly estimated payments if you'll owe $1,000+ in taxes.

Payment deadlines:

Q1: April 15
Q2: June 15
Q3: September 15
Q4: January 15 (following year)

Common mistakes:

Underpaying: Leads to penalties (0.5% per month)
Overpaying: Giving the IRS an interest-free loan
Equal payments: When income is seasonal or lumpy

Our approach: Adjust each quarter based on actual performance

WA & OR-Specific Considerations

Washington

No state income tax on distributions (S-Corp advantage)
B&O tax quarterly filing
L&I premiums (if you have employees)

Oregon

State estimated tax payments required
Kicker credit (if state has surplus)
Transit tax for Portland metro businesses

How Much Does Quarterly Planning Cost?

Standalone quarterly planning: Typically $150-300 per session ($600-1,200/year)

Included in our monthly accounting packages: From $800/mo

ROI: Most clients save 5-10× the cost in reduced taxes and avoided penalties

What You Need to Prepare

Before each quarterly call:

Current P&L (we usually provide this)
Any major upcoming expenses or investments
Changes in business structure or revenue
Personal tax considerations (W-2 income, side income, etc.)

DIY vs. Professional Quarterly Planning

Can you do this yourself? Technically yes, but:

Tax law changes frequently (hard to keep up)
Emotional attachment (hard to be objective about your own business)
Time cost (is your time worth $200/hour analyzing tax code?)
Missed strategies (don't know what you don't know)

When DIY makes sense:

Very simple business (<$50K profit)
Standard deductions only
No employees or contractors
Sole proprietor with no entity complexity

Common Objections (And Why They're Wrong)

"I can't predict my income"

Response: That's exactly why you do it quarterly—adjust as you go

"My CPA handles it"

Response: Most CPAs are reactive (tax prep) vs. proactive (planning)

"I don't want to think about taxes that often"

Response: 45 minutes quarterly vs. a weekend in April—your choice

"I'm too small to need this"

Response: If you're making $60K+ profit, you're not too small

How to Get Started

Book a discovery call: Discuss your situation
Q1 planning session: We review your current year projections
Quarterly cadence: Schedule recurring sessions
Execute strategies: Take action between calls

Most clients start mid-year (no problem—better late than never).

What About Safe Harbor?

Safe harbor rules let you avoid underpayment penalties if you pay:

100% of prior year tax (110% if AGI >$150K), OR
90% of current year tax

Our take: Safe harbor keeps you out of penalty trouble, but doesn't optimize your tax bill. We aim to do both.

The Bottom Line

Quarterly tax planning is the difference between:

Reactive (expensive, stressful) vs. Proactive (optimized, calm)
Guessing vs. Knowing
Surprise bills vs. Predictable cash flow

If you're making $60K+ in profit, you should have a quarterly tax planning system in place.

Learn more about our monthly accounting packages (includes quarterly tax planning) →

Ready to stop reacting to your taxes and start optimizing them? Book a 20-minute intro call to discuss quarterly tax planning.

Book a call →