For self-employed individuals, freelancers, gig workers, and small business owners, paying taxes isn’t just a once-a-year event. If you expect to owe $1,000 or more in federal taxes, the IRS likely expects you to pay estimated tax payments each quarter — and the Q2 estimated tax deadline is June 15.

In this guide, we’ll explain who needs to pay, how to calculate your estimated tax using safe harbor rules, and how to submit payments through IRS Direct Pay or EFTPS. We’ll also cover the penalties for missing a deadline — and how to avoid them.

Who Needs to Pay Estimated Tax Payments?

If you don’t have enough federal income tax withheld from your paycheck or receive income that isn’t subject to withholding, you’re probably on the hook for estimated payments.

Common examples include:

• Freelancers and independent contractors

• Gig workers (Uber, DoorDash, Airbnb hosts, etc.)

• Landlords with rental income

• Small business owners and sole proprietors

• S Corp shareholders

• Retirees with pension, investment, or IRA withdrawals not subject to withholding

IRS threshold:

You’re required to make estimated payments if you expect to owe $1,000 or more in federal taxes after subtracting your withholdings and credits.

When Is the Q2 Estimated Tax Deadline?

The second quarterly tax payment is due June 15, 2025. Even though the tax year follows the calendar year, the IRS splits it into four unequal quarters for estimated tax purposes:

What happens if you miss the Q2 deadline?

Missing a deadline could result in underpayment penalties and interest, even if you plan to catch up later. The IRS calculates penalties based on the amount underpaid and the time it was unpaid — not just whether you eventually make it up.

How to Calculate Your Estimated Tax Payments

The IRS offers two main options for estimating your quarterly payments. Most taxpayers follow safe harbor rules to avoid underpayment penalties.

Option 1: Safe Harbor Rules

You can avoid penalties if you pay:

• 100% of your prior year’s tax liability (if your adjusted gross income was under $150,000), or

• 110% of your prior year’s tax (if your AGI was $150,000 or more)

This is a good option if your income is stable or growing slowly. Simply divide the total safe harbor amount by four and pay it quarterly.

Example:

Let’s say you owed $16,000 in taxes last year. Your AGI was $160,000.
110% of last year’s tax = $17,600
Quarterly estimated payment = $17,600 ÷ 4 = $4,400

Option 2: Current-Year Income Estimate

If your income fluctuates or you had a drop in earnings, you may want to calculate estimated taxes based on your projected current-year income. You’ll need to:

• Estimate total income for the year

• Subtract deductions and credits

• Use IRS Form 1040-ES to calculate quarterly taxes due

While this method is more accurate, it comes with risk — underestimating your income can lead to penalties.

How to Make Your Payment

The IRS offers two convenient, free online systems for making quarterly payments:

Option 1: IRS Direct Pay

• No registration required

• Pay directly from your checking or savings account

• Confirmation is provided immediately

• Visit IRS Direct Pay

Option 2: EFTPS (Electronic Federal Tax Payment System)

• Requires a one-time registration

• Ideal for business owners or those managing multiple tax types

• Ability to schedule future payments

• Visit EFTPS

Other Payment Methods:

• IRS2Go app

• Check or money order (slowest and riskiest for deadline timing)

• Third-party providers (fees may apply)

Penalties for Missing a Deadline

The IRS charges a penalty if you:

• Fail to make a required payment on time, or

• Underpay the amount due

Penalty breakdown:

• Failure-to-pay penalty: 0.5% of unpaid tax per month

• Underpayment interest: Based on the federal short-term rate + 3%

Example:

If you were supposed to pay $4,000 by June 15 and missed it until August 15, you could owe:

• $4,000 x 0.5% x 2 months = $40 in late payment penalty

• Plus interest that accrues daily

How to Avoid Penalties:

• Follow safe harbor rules

• Set calendar reminders for due dates

• Set up EFTPS auto-scheduling

• Adjust your withholding if you’re also a W-2 employee

FAQs About Estimated Tax Payments

1. What if I overpay estimated taxes?

The IRS will refund any overpayment after you file your tax return, or you can apply it to next year’s estimated taxes.

2. Can I skip a quarter and catch up later?

No. The IRS expects payment each quarter. Skipping one and doubling up later still results in penalties.

3. What if I’m a first-time filer?

You’ll need to estimate your full-year income using IRS Form 1040-ES. If unsure, safe harbor based on a tax pro’s projection is your safest bet.

4. Are estimated payments required in retirement?

If your retirement income isn’t subject to withholding — such as rental income or large capital gains — you may need to make estimated payments.

5. Are there tools or calculators to help?

Yes! The IRS offers an online Tax Withholding Estimator, and many tax software platforms include quarterly payment tools.

Conclusion: Don’t Miss the June 15 Deadline

The Q2 deadline for estimated tax payments is a key checkpoint for keeping your finances — and IRS record — in good shape. Whether you’re self-employed or managing a small business, understanding your tax obligations and following safe harbor rules will help you avoid costly surprises.

Need Help Navigating Estimated Tax Payments?
Our trusted partner, Solutions Group Accounting, specializes in helping small business owners, freelancers, and self-employed professionals stay compliant with quarterly tax obligations. Whether you need help calculating your Q2 payment, understanding safe harbor rules, or setting up IRS payment systems, their expert team is ready to guide you every step of the way.

Selling a business can be one of the most profitable — and complex — decisions a small business owner makes. But before you celebrate a big payday, it’s essential to understand the tax implications of selling a business. From capital gains taxes to depreciation recapture and how goodwill is treated, the way your sale is structured can significantly impact how much you keep after the IRS takes its share.

If you’re planning to sell your business in the next 1–3 years, now is the time to start tax planning. In this guide, we’ll break down the most critical tax factors that can influence your net proceeds, with examples and actionable tips.

Asset Sale vs. Stock Sale: Why Structure Matters

One of the first and most important distinctions in a business sale is whether it’s an asset sale or a stock sale. Each structure has different tax consequences for both buyers and sellers.

What is an Asset Sale?

In an asset sale, the buyer purchases individual business assets — such as equipment, customer lists, inventory, and intellectual property. The business entity itself (like the corporation or LLC) remains with the seller.

Tax implications for the seller:

• Gains from each asset are taxed separately.

• Depreciable assets may trigger depreciation recapture, taxed as ordinary income.

• Goodwill and other intangibles are taxed as long-term capital gains.

Buyer preference: Buyers usually prefer asset sales because they can “step up” the basis of the assets and get future depreciation deductions.

What is a Stock Sale?

In a stock sale, the buyer purchases the ownership shares of the business entity. This is more common when selling a corporation.

Tax implications for the seller:

• Entire gain is generally taxed at long-term capital gains rates (typically 15–20% federally).

• No depreciation recapture.

Seller preference: Sellers prefer stock sales for their tax simplicity and lower overall tax rate.

Example:

Let’s say you’re selling your plumbing business for $2 million.

• In an asset sale, $1.2M of that is allocated to equipment and inventory (subject to depreciation recapture), while $800K is goodwill (capital gains).

• In a stock sale, the full $2 million is taxed at capital gains rates.

The structure alone could mean a difference of tens or even hundreds of thousands of dollars in after-tax proceeds.

Capital Gains vs. Ordinary Income

Understanding the difference between capital gains and ordinary income is central to business sale tax planning.

Capital Gains

• Long-term capital gains (assets held >1 year) are taxed at 15%–20% federally.

• Applies to most intangible assets like goodwill, trademarks, and stock.

Ordinary Income

• Applies to depreciation recapture, inventory, and other “hot assets.”

• Taxed at your marginal tax rate — which could be up to 37%.

Depreciation Recapture Example

If you sell equipment originally worth $100,000 that’s been fully depreciated, the $100,000 is considered recaptured depreciation and taxed as ordinary income — not capital gains.

That’s a big difference in tax rate: 37% vs. 20%.

How Goodwill is Treated in a Sale

Goodwill represents the intangible value of your business — your brand, customer relationships, and reputation. It’s often the largest portion of the deal in a small business sale.

Tax Treatment:

• For sellers: Goodwill is a capital asset, so it’s taxed at long-term capital gains rates.

• For buyers: It’s amortized over 15 years for tax purposes.

Example:

If $500,000 of your $1.5 million sale price is allocated to goodwill, that portion will be taxed at the lower capital gains rate, saving you significantly over time.

Installment Sales: Spreading Out the Tax

Rather than receiving the full sale price upfront, some business owners opt for installment sales, where payments are received over time.

Benefits:

• Spreads tax liability over multiple years.

• Keeps seller in a favorable tax bracket annually.

Risks:

• Buyer defaults.

• Tax rates increase in future years.

Example:

If you sell your business for $900,000 over 3 years, you only pay capital gains tax on each year’s received installment — potentially keeping you in a lower bracket than taking $900,000 all at once.

Tax Timing: Year-End and Other Considerations

The timing of your sale can affect your taxes significantly.

• Selling in December could push you into a higher bracket.

• Closing in January delays tax liability by a full year.

You can also benefit from certain year-end strategies like:

• Accelerating deductions

• Deferring income

• Harvesting capital losses

Proactive Tax Planning Strategies

Tax planning well before the sale — ideally 1–3 years in advance — can help maximize your after-tax proceeds. Here are several strategies to consider:

1. Qualify for Section 1202 (QSBS Exemption)

If your business is a C-corp and meets certain requirements, you may be able to exclude up to 100% of capital gains (up to $10 million) under Qualified Small Business Stock (QSBS).

2. Use a Charitable Remainder Trust (CRT)

Reduce taxes and support a cause by donating shares to a trust before the sale, avoiding immediate capital gains tax.

3. Optimize Entity Structure

Revisit your business entity. S-corps, C-corps, and LLCs are all taxed differently when selling.

4. Consult a Tax Advisor

Work with a CPA or tax attorney who has experience in M&A and exit planning.

Don’t Forget State Taxes and Other Surprises

State Taxes:

Some states — like California and New York — have high capital gains tax rates in addition to federal taxes.

Other considerations:

• Net Investment Income Tax (NIIT): 3.8% surtax may apply if your income exceeds $250K (married filing jointly).

• Alternative Minimum Tax (AMT): Rare, but can apply in complex deals.

• Self-employment tax: If you continue working in the business after the sale.

Summary: Early Planning = More Money in Your Pocket

Selling your business is a major milestone, but poor tax planning can eat into your profits. Key takeaways include:

• Understand your deal structure — stock vs. asset sale has a huge tax impact.

• Know how each portion of the sale is taxed — capital gains vs. ordinary income.

• Use timing and installment strategies to manage when and how you pay taxes.

• Start planning 1–3 years before your sale with the help of a qualified advisor.

FAQs: Tax Implications of Selling a Business

1. Do I pay capital gains tax when selling my business?

Yes — typically on the sale of goodwill, stock, and other capital assets. Parts of the sale may also be taxed as ordinary income (e.g., equipment, inventory).

2. What’s the difference between an asset sale and a stock sale?

An asset sale involves selling individual assets; a stock sale transfers ownership of the entire business entity. They are taxed differently.

3. How does depreciation recapture work?

It taxes previously deducted depreciation as ordinary income instead of capital gains — often at a higher rate.

4. Can I defer taxes by doing an installment sale?

Yes — you pay taxes as you receive payments over time, which can help manage tax brackets.

5. What happens if I sell to a family member?

The IRS may scrutinize the deal for “related-party” transactions. You still owe taxes, and special rules may apply to valuation and deductions.

6. Can I avoid taxes by rolling the money into another business?

No, unlike real estate 1031 exchanges, there’s no like-kind exchange for business sales under current IRS rules.

7. Should I sell my business at year-end or wait?

Selling at year-end might push you into a higher tax bracket. Selling in January may delay the tax liability and create planning opportunities.

Conclusion: Plan Ahead to Maximize Your After-Tax Profit

Selling your business isn’t just about finding the right buyer or getting a high valuation — it’s also about what you keep after taxes. The structure of the sale, how assets are allocated, and the timing of the transaction all play major roles in your final financial outcome.

Whether you’re a few months or a few years away from an exit, understanding the tax implications of selling a business gives you the power to make informed decisions and avoid costly surprises. Working with experienced tax advisors, CPAs, and transaction attorneys will help you navigate complex issues like depreciation recapture, capital gains treatment, and state-level tax exposure.

With proactive planning, you can preserve more of your hard-earned equity and set yourself up for financial success in the next chapter of your life — whether that’s retirement, a new venture, or simply enjoying the rewards of your work.

Ready to Maximize the Value of Your Business Sale?

Don’t leave your hard-earned profits on the table. The right tax strategy can make a six-figure difference in your final payout.

Solutions Group Accounting specializes in helping business owners navigate complex exit planning, minimize tax liabilities, and ensure a smooth transition. Whether you’re months or years away from selling, their team of experienced CPAs and advisors can build a tailored strategy to protect your wealth.

For many growing businesses, Microsoft Dynamics (including Dynamics GP, NAV, or Business Central) offers robust ERP features. But as your organization evolves, you may find that the platform becomes too complex or costly for your current needs. That’s when a Microsoft Dynamics migration to QuickBooks becomes an attractive option.

In this guide, we’ll explore when and why a migration makes sense, what the process entails, and how to avoid common pitfalls. If you’re seeking a more cost-effective, user-friendly solution for accounting and financial management, switching to QuickBooks Online or QuickBooks Enterprise might be the right move.

Why Migrate from Microsoft Dynamics to QuickBooks?

While Microsoft Dynamics is powerful, many small and mid-sized businesses are finding that it’s overbuilt for what they need. Let’s look at some of the top reasons organizations are choosing QuickBooks:

1. Lower Total Cost of Ownership

Microsoft Dynamics typically requires more expensive licenses, dedicated servers (on-premise versions), and IT maintenance. QuickBooks Online Advanced starts at ~$200/month for 25 users, significantly reducing overhead costs.

2. Simplified User Experience

QuickBooks is built for non-accountants, whereas Dynamics is more geared toward finance and IT teams. QuickBooks’ intuitive design allows for faster onboarding and less reliance on support teams.

3. Faster Implementation

Implementing or upgrading Dynamics can take months. QuickBooks setup, even including data migration, can often be completed in days or a few short weeks.

4. App Ecosystem & Integrations

QuickBooks integrates with 750+ business apps including Gusto, HubSpot, Shopify, and Stripe—offering strong automation and customization.

5. Cloud-Based Access

QuickBooks Online is 100% cloud-native. While Dynamics 365 is also cloud-based, older versions like GP and NAV are typically on-premise, requiring additional hosting or remote-access workarounds.

Who Benefits from a Microsoft Dynamics Migration to QuickBooks?

A migration to QuickBooks is ideal for:

• Businesses scaling back from ERP-level complexity

• Companies with less than 250 employees

• Service-based businesses, nonprofits, and SMBs

• Organizations looking to simplify reporting and reduce IT involvement

What Data Can Be Migrated from Microsoft Dynamics?

Before migrating, it’s crucial to understand what data can be transferred successfully—and what might need to be recreated in QuickBooks.

Source: Intuit Data Services 

Real-World Case Study

Client: B2B Technology Consulting Firm

Problem: Microsoft Dynamics GP required custom development and third-party hosting. Reports took too long to generate and system maintenance costs were high.

Solution: Migrated to QuickBooks Online Advanced with customized reporting and app integrations.

Results:

• Reduced monthly accounting software spend by 70%

• Month-end close time dropped from 12 days to 5

• Improved financial visibility across departments

Microsoft Dynamics vs QuickBooks: Feature Comparison

FAQs About Microsoft Dynamics Migration to QuickBooks

Q: Can I migrate from Microsoft Dynamics GP to QuickBooks Online?

A: Yes, though GP stores data in SQL databases, requiring conversion to CSV or use of migration tools.

Q: Will I lose historical data?

A: Not necessarily. You can import summaries or 1–2 years of transaction history. Archive the rest as PDFs or backups.

Q: Is QuickBooks secure for sensitive financial data?

A: Yes. QBO uses 128-bit SSL encryption and is hosted on SOC 2-compliant infrastructure.

Q: Can I get help from Intuit for this migration?

A: Intuit’s data migration team offers limited support, so for Dynamics, it’s best to use a certified partner or tool.

Q: Can I run both systems in parallel during transition?

A: Yes, but ensure strict cut-off dates and reconciliation to avoid double-entry or conflicting records.

Final Thoughts

A Microsoft Dynamics migration to QuickBooks is a strategic decision for companies that want agility, lower costs, and an easier accounting experience. With careful planning and the right tools, you can move from enterprise-grade ERP to a nimble, cloud-based system—without losing essential data or insights.

Whether you’re using Microsoft Dynamics GP, NAV, or Business Central, our team of certified ProAdvisors can help you plan and execute a smooth migration tailored to your business.

Need Expert Help Migrating from Dynamics to QuickBooks?

We specialize in complex accounting system migrations. Let us handle the details while you focus on your business.

Schedule your free migration consultation today.

Cloud-based accounting platforms like Xero and QuickBooks Online are popular among small and mid-sized businesses looking for accessible, user-friendly financial tools. But if you’ve outgrown Xero or found it doesn’t meet your evolving needs, a Xero migration to QuickBooks might be your next smart move.

Whether it’s due to feature limitations, compatibility with third-party apps, or scalability concerns, many businesses choose to switch. This guide walks you through the key reasons for migrating, the steps to take, what data transfers, and how to ensure your migration is smooth, accurate, and efficient.

Why Businesses Are Switching from Xero to QuickBooks

QuickBooks Online is one of the most widely adopted accounting solutions in North America. Businesses migrating from Xero to QuickBooks often cite these advantages:

1. Broader Integration Ecosystem

QuickBooks integrates with over 750 apps, including Gusto, Stripe, Shopify, HubSpot, and Square. While Xero has many integrations, QuickBooks’ ecosystem is broader and better supported in the U.S.

2. Better Support and Ecosystem in North America

QuickBooks has a larger U.S. support infrastructure, more ProAdvisors, and deeper integration with U.S. tax and banking systems. For U.S.-based businesses, it often provides a smoother experience.

3. Scalability with QuickBooks Online Advanced

QuickBooks Online Advanced supports up to 25 users and includes tools like custom workflows, enhanced reporting, and role-based access—ideal for growing teams.

4. Native Payroll Options

QuickBooks has a fully integrated payroll system. Xero Payroll is not available in many U.S. states, often requiring third-party workarounds.

5. Easier Collaboration with U.S.-Based Accountants

Many CPAs and bookkeepers in the U.S. are certified QuickBooks ProAdvisors, making collaboration, tax prep, and compliance more streamlined.

Who Should Consider a Xero Migration to QuickBooks?

A Xero-to-QuickBooks migration makes the most sense for businesses that:

• Operate primarily in North America

• Are scaling and need more advanced features or users

• Want easier access to U.S.-specific integrations or support

• Prefer a more familiar platform for their accountants or tax professionals

What Transfers During a Xero Migration to QuickBooks?

Before migrating, it’s critical to understand which data elements transfer automatically and which need manual work.

Source: Intuit QuickBooks Data Services, Dataswitcher

Real-World Example

Client: A digital marketing agency with 12 employees

Reason for Migration: Xero lacked payroll support for their state, and their bookkeeper preferred QuickBooks for reporting and 1099 filings.

Solution: Migrated to QuickBooks Online Advanced using Dataswitcher.

Results:

• Completed migration in 4 business days

• Rebuilt key reports in QBO with custom tags

• Cut payroll processing time by 50% with QuickBooks Payroll

Xero vs QuickBooks: Side-by-Side Comparison

FAQs About Xero Migration to QuickBooks

Q: How long does a Xero migration to QuickBooks take?

A: Small business migrations typically take 2–5 business days. Complex setups or large historical data imports can take 1–2 weeks.

Q: Will I lose my Xero data?

A: No. Your Xero data remains intact. You should download and archive PDFs or CSVs of historical reports before canceling your subscription.

Q: Can I migrate all of my historical transactions?

A: Not natively. QuickBooks typically supports importing 12–24 months of transactions. For full history, use a tool like Dataswitcher.

Q: Can I access Xero after migration?

A: Yes, as long as your subscription is active. Consider downgrading to a lower plan for record access or exporting all key reports.

Q: Do bank feeds transfer from Xero to QuickBooks?

A: No. You’ll need to reconnect your bank accounts and credit cards in QuickBooks.

Final Thoughts

A Xero migration to QuickBooks can streamline your accounting operations, improve payroll management, and align you with the most widely-used accounting system in the U.S. With the right tools and preparation, it can be a smooth, efficient process.

Whether you’re migrating due to functionality, team preferences, or scalability, QuickBooks offers the flexibility and power your business needs to grow with confidence.

Need Help Migrating from Xero to QuickBooks?

We specialize in seamless QuickBooks data migrations—including from Xero, Sage, NetSuite, and Microsoft Dynamics. Our ProAdvisors will guide you from data prep to go-live with zero downtime.

Schedule your free consultation now.