The Benefits Of Quarterly Tax Payments
Paying your taxes annually is often painful enough, but you do have the option of paying them quarterly. Bookkeeping with an accountant makes paying your taxes quarterly easy to do, too. There are also several benefits tied to paying your taxes quarterly, which may persuade you to change your mind about how much and how often you pay your taxes. The following three benefits are the most encouraging.
If You Usually Owe Money Every Year, You Will Pay Less at the End of the Year
Consumers and business owners who find that they have to pay large sums of money to the government every year at tax time switch to quarterly payments. Not only does this help them manage the amount of money they eventually owe but also helps them break it down into payments that will not be financed and have additional charges attached to them. They pay less with the last quarterly payment during annual tax season, too.
Paying Your Estimated Tax Quarterly May Result in a Refund Next Year
Switching to quarterly tax payments may result in a refund next tax season. This can happen when the government adds new tax laws or changes old tax laws that result in fewer taxes required, and you have already paid estimated tax payments in excess of the new required amounts. Overpayments can occur regardless of tax laws, in which case your quarterly payments could also result in a refund at the end of the tax year.
You End up With Well-Kept Accounting Records
In order to pay your taxes (or estimated taxes) quarterly, your accountant has to go over all of your finances, income, expenses, etc., with a fine-toothed comb. Every entry has to be inserted into the bookkeeping in order to get an accurate amount of tax owed or expected tax owed. After you have paid that quarterly tax amount, your books are so well-kept that they will continue into the next quarter with zero errors so that the next quarter's tax payment is accurate as well.
At the end of the year, you will end up with perfectly kept accounting records of everything earned, spent, etc., and that is ideal if you are ever audited. A tax auditor cannot argue with accounting books where everything has been professionally and expertly recorded every quarter for the last year. He or she would glance over the numbers and entries and see that everything is as it should be.