Tax Planning
Estimated payments should follow a projection, not last year
The problem
Most estimates are computed from the prior year and then ignored while the current year turns out completely differently.
Why it matters
Overpaying hands cash to the government you needed for working capital. Underpaying adds penalties and a spring surprise. Both are avoidable with a live projection.
How to know if you have this
- Estimates equal last year's tax divided by four
- Profit this year differs materially from last year
- April is regularly a surprise
- You have paid underpayment penalties
How Advisory Motion solves it
- 01Maintain a current-year tax projection updated through the year
- 02Set each quarterly payment from the projection and safe-harbor rules
- 03Coordinate payments with the 13-week cash forecast
- 04Adjust immediately when a large transaction or profit swing occurs
Illustrative example
$140K reserved before it was owed
A strong second half was flagged in August rather than March. The reserve was built across four months instead of demanded in one.
Illustrative composite · not a client identification
Where this connects