Should Small Business Pay Taxes Quarterly?


Authored by Douglas Mefford in Taxes
Published on 08-28-2009

There are many differences in the way the Internal Revenue Service (IRS) demands payment from small business owners as opposed to large businesses and corporations. Despite the founding fathers’ dream of the “American Way” of each individual being able to make a self-sufficient living, the IRS seems to excessively attack the small business owner. It is much more likely that an audit or penalty is levied against a small, single proprietor business with the results of that business failing.

Only one of these many unequal processes is in the frequency of having to file and pay federal taxes. This does not include such payments as Social Security, Medicare and payroll taxes collected from employee’s salaries. Large businesses and corporations are only required to file and pay once a year. The small businessman, with limited resources and smaller profits, is required to pay every quarter. Failure to do so results in high penalty fines and sometimes prison sentences. Invariably the independent businessman is forced to close his endeavor and, whenever he is released, must resort to becoming a worker for some other larger business or corporation.

The IRS justifies their excessive monitoring of small businesses by declaring that it is within the small business sector of individual businesses that tax evasion and tax fraud is most rife. They state that they lose greater revenue from the many small businesses than they do from huge corporations or multinational corporations that can divert profits to foreign countries and thus avoid tax payments. By forcing payments quarterly from small businesses, they say it is easier to monitor and collect from them.

It would seem fairer and more just that businesses be held accountable to the same rules whether they make $10,000 a year or $10,000,000. Compounding the inequity of such double standards for business tax payments is the requirements for how small businesses must estimate their tax payments. They must pay on their estimate of future sales rather than a yearly assessment of what revenue was actually generated. While a large business only needs to pay on what they made the previous year, the small businessman must somehow estimate and then pay quarterly an amount that must tally up to at least 90% of what they will actually make or be heavily penalized.

That during times of economic recession small businesses are even more closely monitored and audited seems out of line with the original plans for the citizens of this nation. The quarterly tax payments put a much greater burden on people who are merely trying to be self determined the way the original republic intended. That the federal government lays such double standards on businesses in regards to size should make the process highly suspect.

Small businesses should not be required to exist under any different rules than a large corporation. Their tax payments should not be required to be made any more often than any other business. The current system used by the IRS against small business owners is heavily biased for the large businesses. By their very nature and general interconnectivity, it is the large corporations that should be more closely monitored and regulated while a small, independent business should be encouraged to grow rather than be shackled with extra regulations and expenses.


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