My understanding on small business owners' taxes is as follows:
- Estimated taxes are due four times a year: Jan 15, April 15, June 15, and September 15 (strangely, not all 3 months apart)
- As long as his payment of estimated quarterly taxes equals or is greater than 1/4 of his tax bill for the previous year, he is OK, even though this year his income (therefore taxes) may be higher than last year.
- So on Jan 15, 2008, his payment due is 1/4 of his total tax bill of 2006.
- If he has an S-corp, he will need to file his taxes by March 15. Any taxes he hasn't yet paid as of Jan 15 will come due then.
- If he is a sole proprietor, all the taxes for the previous year he has not yet paid as of Jan 15 will become due on April 15, along with his estimated taxes for the first quarter. That's why April 15 is a killer for sole proprietors.
- Depending on his situation, he should meet with his accountant before March 15 (or April 15 for sole proprietors) to figure out taxes owed for the previous year. No need to pay everything by Jan 15.
- Meeting with the accountant and filing should probably happen earlier rather than later, so he can figure out how much to contribute to his SEP-IRA or if he is eligible for Roth or traditional IRA, if that makes sense.
This is just what I've been doing. So far, no visits from or to the IRS yet.