Unfortunately, if the coming year turns out to be a bad one financially, basing estimated tax payments on the previous year can mean the government, not the business, gets use of those funds, interest free, for up to a year. If the coming year turns out to be a good one, basing estimated tax payments on the previous year may mean no penalty but a whopping tax bill when the tax return is filed – along with the first estimated tax installment for the upcoming tax year.
Estimating the income – and the tax bill – of any snow or ice management business can be a nightmare especially when compounded by the economy, our battling lawmakers, and the uncertainty over Obamacare and tax reform. While most self-employed snow removal professionals and businesses have software programs or a professional to help with estimated tax payments, few are aware of how to anticipate – or handle – changes.
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