I have an online used clothing business. Have always paid yearly taxes, not quarterly. I end up paying 3-4k in taxes every April. This has worked fine for me and I’ve never had any penalties for not filing quarterly. I opened up a booth in an antique mall midway through December 2024. On January 5, 2025, I got my first check from the mall for $1,500. This mall collects and reports sales tax. They are saying that there’s going to be a severe penalty if I don’t file quarterly taxes. I’m fine with doing that going forward, but my entire 2024 business was not set up for it. Additionally, I understand that they collected sales tax for 2 weeks in December, but I didn’t earn that income until 2025. Can I just wait and do my yearly taxes as usual and start quarterly for the 2025 tax year?
Do you have a reseller permit with your state? That’s a separate filing than income taxes; it’s the sales tax report.
Quincy said:
Do you have a reseller permit with your state? That’s a separate filing than income taxes; it’s the sales tax report.
I just got that for 2025. I’ve been lazy with it up until now. So technically I didn’t have it for 2024.
@Charlie
Then for 2025, don’t skip the quarterly sales tax filing.
Quincy said:
@Charlie
Then for 2025, don’t skip the quarterly sales tax filing.
Thanks! That’s what I was thinking, too. Appreciate your response.
You’re combining a couple different things here.
Sales tax has nothing to do with income tax. The requirements for filing sales tax returns would be highly specific to your local area, including any penalties for failing to file. You’ll need to figure out what those rules are for your jurisdiction.
Federal income tax is due as the income is earned. In general, if you owe more than $1,000 and more than 10% of your tax in April, you owe penalties and interest to the IRS. That’s not specific to running a business; that’s just universally true for all taxpayers. Tax is due as money is earned.
Unless you have access to a time machine, you obviously already didn’t make quarterly estimated payments for 2024, so if you’re going to owe income tax, you already owe penalties, and interest is already accruing. The sooner you make a payment, the better.
Making those payments going forward will avoid penalties in future years.
I agree with voteydisciple. You can go without paying quarterly; some businesses do this as a strategy. But yes, you will owe penalties while doing so. Go talk to your accountant or stop by your division of taxation regional office to see if they can steer you in the right direction. Don’t let it get solved on Reddit, or you’ll be having a stroke by the end of this year when the IRS sends you a bill.
@Vale
Thanks! I keep really good track of everything and file early every year, paying in full. Sometimes TurboTax says something like “for your records or to make payments easier next year, consider filing quarterly.” Which I will do from here on out now that this booth is in play, but my 2024 was just not set up for it.