Running a handmade or vintage business on Etsy comes with exciting creative opportunities but also financial responsibilities. One of the most important—yet often overlooked—aspects of running a business is paying quarterly taxes. If you’re self-employed, the US Internal Revenue Service (IRS) requires you to pay estimated taxes four times a year to avoid penalties.
But don’t worry—staying on top of quarterly tax deadlines doesn’t have to be stressful. In this guide, we’ll break down what quarterly taxes are, who needs to pay them, and how to calculate what you owe. Plus we’ll share tips and tools to help you track income and stay organized.
📌 Note: This article discusses tax topics related to US taxes only. If you’re outside the US, consult a local tax professional for guidance. eRank does not provide legal or tax advice. This article is for informational purposes only. Always check with a tax professional for personalized recommendations.
What Are Quarterly Taxes?
Unlike traditional employees who have taxes withheld from their paychecks, self-employed individuals must estimate their tax liability and pay it throughout the year. These payments include:
- Income tax (based on your earnings)
- Self-employment tax (covers Social Security & Medicare)
- State taxes (if applicable)
By paying quarterly, you avoid a large tax bill at the end of the year and reduce the risk of IRS penalties
Who Needs to Pay Quarterly Taxes?
You must pay estimated quarterly taxes if you expect to owe at least $1,000 in taxes for the year. This applies to:
- Full-time Etsy and other online sellers
- Part-time sellers with significant income
- Handmade business owners
- Freelancers and self-employed creatives
💡 Not sure if you need to pay? If you made a profit (after deducting business expenses) and don’t have taxes automatically withheld elsewhere, you likely need to make estimated payments.
When are the Quarterly Tax Deadlines?
Mark your calendar! The IRS requires estimated payments four times a year:
- Q1 Payment – April 15 (Covers income from Jan 1 – Mar 31)
- Q2 Payment – June 15 (Covers income from Apr 1 – May 31)
- Q3 Payment – September 15 (Covers income from June 1 – Aug 31)
- Q4 Payment – January 15 (Covers income from Sep 1 – Dec 31)
⚠️ Note: If the deadline falls on a weekend or holiday, the due date moves to the next business day.
How to Calculate What You Owe
Quarterly payments are based on your expected annual income. You can estimate your taxes using this formula:
Formula:
(Total Expected Income – Business Deductions) × Tax Rate ÷ 4 = Quarterly Payment
Example:
- You expect to make $40,000 this year.
- You estimate $10,000 in business deductions.
- Your taxable income is $30,000 ($40,000 – $10,000).
- Your estimated tax rate is 20% (varies by income).
($30,000 × 0.20) ÷ 4 = $1,500 per quarter
💡 Pro Tip: Use IRS Form 1040-ES or an online tax calculator to fine-tune your estimate.
How to Pay Quarterly Taxes
The IRS offers multiple ways to submit payments:
- Online: Use the IRS Direct Pay system.
- By Phone: Call the IRS payment hotline.
- By Mail: Send a check with Form 1040-ES.
For more information about these and other available options, check out Choose a Convenient Payment Option.
💡 Note: State tax payments may also be required. Check with your state’s tax department to see if you need to make separate estimated payments.
Tips to Stay on Track with Quarterly Taxes
1. Set Aside Taxes from Every Sale
To avoid a last-minute scramble, automatically save 20-30% of your income for taxes in a separate business account.
2. Track Your Income & Expenses
Use a system to log every sale, expense, and deduction to keep your tax records organized. eRank’s Profit Calculator helps estimate your earnings and costs.
3. Plan Ahead for Deductions
Handmade sellers can deduct materials, shipping, Etsy fees, home office expenses, marketing costs, and more. Keeping detailed receipts will save you money at tax time. Check out Are You Keeping All Your Receipts? for tips.
4. Set Calendar Reminders
Never miss a deadline! Set automated reminders for quarterly tax due dates.
💡 Tip: Check in with a tax professional at least once a year to ensure you’re on track with payments and deductions.
Stay Ahead of Taxes & Keep Your Business Thriving
Paying quarterly taxes doesn’t have to be overwhelming! By staying organized, tracking expenses, and planning ahead, you’ll make tax season easier while avoiding penalties.
✅ Action Step: Mark the tax deadlines on your calendar and start setting aside your estimated payments today.
For more small business tips, SEO strategies, and financial insights, check out the eRank Blog.
