Safe harbor protects you from an IRS penalty, but it doesn't protect you from a bigger tax bill when your business grows. This episode of CEO Numbers Network explains the difference, and what to do about it before next April.
I explain safe harbor, the IRS rule that protects business owners from an underpayment penalty, and why it's often mistaken for a complete tax plan. I walk through the exact math the IRS uses to calculate what you owe throughout the year, and I share two real client stories, one who paid faithfully and still got a surprise bill, and one who had never paid estimated taxes at all. I also break down the tax reserve, a separate number based on this year's income that safe harbor alone doesn't cover, and I give you three concrete steps to close that gap before your next tax season.
You will learn what safe harbor actually protects you from and how the tax reserve closes the gap it leaves behind.
If you have ever paid every estimated tax payment on time and still gotten a bill you didn't expect, this episode will show you exactly why, and what to do differently before next April.
👉 Discover how our tax team can build your tax reserve alongside your safe harbor payments: here.
Key Takeaways
00:00 Why paying on time still bites
02:18 What Safe Harbor covers
04:28 Growing faster than your tax plan
05:18 The Safe Harbor floor mistake
05:29 Two client stories on the gap
07:24 The tax reserve formula
10:29 The CEO question to ask
11:44 Three steps to close the gap
Resources
📥 Download our free mid-year tax check-in checklist: here
📈 Book a strategy call with Danielle's team at Kickstart: here
👉 Check your books here
👉 Visit the Kickstart website
👉 Follow us on Instagram
Listen Next
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