If you have an LLC or are self-employed in the United States, there's one date you should mark on your calendar: September 15th . That's the deadline for your third tax payment of the year, and it's not just your accountant's suggestion—it's an IRS deadline. Estimated tax payments are the number one reason why Hispanic entrepreneurs who do everything right end up with a penalty when filing their taxes.
The reason is simple, and almost no one explains it when starting a business: in the United States, income tax isn't paid once a year. It's paid as you earn. When you were an employee, your employer withheld taxes every two weeks, and you never even saw it. When you become self-employed, that withholding disappears, and the responsibility shifts to you.
What are estimated tax payments?
These are quarterly payments you make to the IRS toward the tax you will owe for the year. They cover two things: income tax and self-employment tax (Social Security and Medicare).
These rules generally apply if you expect to owe $1,000 or more when you file your return, after deducting withholdings and refundable credits. This includes most single-member LLC owners, partnership partners, 1099 independent contractors, and self-employed individuals.
The four dates of the year
Estimated tax payments are not an annual event. There are four:
- April 15 — covers income from January to March.
- 15 June — covers April and May.
- September 15 — covers June, July and August.
- January 15 of the following year — covers September to December.
If the due date falls on a Saturday, Sunday, or federal holiday, it's moved to the next business day. Note something important: the periods are not equal quarters. The second payment covers two months, and the third covers three. Many people calculate "one quarter every three months" and end up with late payments.
The $1,000 threshold: when there is no penalty
The IRS doesn't penalize everyone. Generally, there's no penalty for underpayment if, when you file your return, you'll owe less than $1,000 after deducting your withholdings and refundable credits.
That's why, if your business is just starting out and profits are still small, you might not need to make estimated tax payments this year. And that's also why, if your partner has a job with withholding, it's sometimes a good idea to increase that withholding on their W-4 instead of making separate quarterly payments: the IRS treats the withholding as if it had been paid consistently throughout the year.
How the fine is calculated: it's interest, day by day.
There's a costly misunderstanding here. The underpayment penalty isn't a fixed amount they charge you at the end. The IRS calculates it as interest on the amount you missed, from each due date until you pay.
The rate is set quarterly. For the quarter running in 2026, it's 7% annually for individuals and non-corporate taxpayers. This means two practical things: the later you pay, the more it grows; and paying late is much better than not paying at all, because interest stops accruing on what you've already paid.
The two safe harbors: 90% and 100%
The IRS offers two ways to protect yourself even if you ultimately owe money. You only need to comply with one of them.
90% of this year's tax
If withholdings and estimated payments cover 90% of the total tax you'll owe for the current year, there's no penalty, even if the final balance is high. The problem is that it requires guessing how your year will end, and in a seasonal business, that's not always possible.
100% of last year's tax
It's the easiest to calculate and the one I most recommend to beginners: take the total tax from your previous year's return, divide it by four, and pay that amount. That will cover you even if you earn significantly more this year.
There is one exception: if your adjusted gross income for the previous year exceeded $150,000 ($75,000 if you file married separately), the percentage increases to 110% instead of 100%.
What to do if your income is seasonal
Many Hispanic businesses don't earn a steady income year-round: a taco stand across from a school, a landscaping service, a store that relies on December sales. If you pay four equal installments, during the slower months you're essentially paying in advance for money you'll need.
That's what the annualized income method is for , which is calculated on Schedule AI of Form 2210. It allows you to pay taxes in proportion to what you actually earned in each period. It requires keeping your records up-to-date quarterly, so it's worthwhile when there's a significant difference between seasons.
Where and how to pay
You can pay online through your IRS.gov account, with Direct Pay from your bank account at no cost, using the EFTPS system, or by card (the latter incurs a processor fee). You can also mail a check with the Form 1040-ES coupons.
A tip that can transform a business's finances: don't wait until the last minute to start saving. Set aside a fixed percentage of each sale in a separate account every week. When September 15th rolls around, the money will already be there, and payment will no longer be a shock. We elaborate on this in our guide to business financial planning.
Frequently asked questions about estimated tax payments
What if I missed a date?
Pay as soon as you can. Interest only accrues while the balance remains unpaid, so each day you pay early reduces the penalty. Don't wait until the next quarter.
Do I have to pay if my LLC didn't make a profit?
If there was no profit, there's no income tax to calculate. But remember that the calculation is based on your total situation, not just the business: other income counts.
Do the estimated payments include state taxes?
No. These are federal. Many states have their own estimated payment schedules, with their own dates and rules. Check your state's separately.
Can I make one large payment in January?
You can, but the IRS calculates the penalty period by period. If you earned starting in January, paying everything in January of the following year doesn't erase the interest from previous periods.
What if I have an LLC that is taxed as an S-Corp?
The structure changes: part of your income is paid as salary with payroll withholding, and part is distributed. This typically reduces estimated personal expenses but increases payroll obligations. We compare this in LLC vs S-Corp.
Check today if you're up to date
Take your tax return from last year, look at the total tax, divide it by four, and compare it to what you've paid in 2026. If you're short, you still have time to make up the difference before September 15 and stop the interest accruing.
For the full picture, check out our guide to US business taxes and how to pay your business taxes . If you're still setting up your business and want to budget effectively from day one, see how much it costs to open a business in the United States.
The official rules are in IRS Topic 306 regarding the underpayment penalty.
Not sure how much to send in September? Contact us through our contact page and we'll review it with your figures.
