It’s not yet tax season, I know, I know. But as a self-employed freelancer, solopreneur or consultant, and doer of all things for your business, it’s quite imperative that you prioritize estimated quarterly taxes — the next deadline is just around the corner. And actually, there are penalties if you ignore these taxes. So listen up, freelance friends!

Over the years, I’ve picked up a few best practices and have sure learned a thing or two about estimated quarterly taxes from my own less-than-desirable experiences as a freelance business owner. Like once, when I didn’t pay them on time out of complete avoidance and lack of understanding, and ended up forking over a penalty payment and enjoyed a good old-fashioned slap on the wrist from the IRS.

Bottom line: Understand your estimated quarterly tax commitment and pay them on time.

Who Pays Estimated Quarterly Taxes?

Whether you’re a new freelancer, veteran freelancer, full-time freelancer or part-time freelancer, we’re all on the chopping block for paying estimated taxes four times per year, every year. It’s not necessarily about how much you work as a freelancer; it’s about how much money you earn that determines if, and how much, you pay.

David Kasperik, certified public accountant and principal of Incompass Tax, State and Business Solutions in Sacramento, says that someone who is self-employed should be making estimated tax payments if he or she owes more than $1,000 to the IRS and/or more than $500 to the state of California when filing a personal tax return.

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On the other hand, according to Freelancers Union — a nonprofit organization that promotes the interests of independent workers through advocacy, education and services — you most likely do not need to pay these taxes if you paid no income tax or received a refund last year, and you do not need to pay quarterly taxes if this is your first year freelancing and had no freelance income last year.

What are Estimated Quarterly Taxes?

If you’re traditionally employed by a company, your employer pays necessary taxes on your behalf to Uncle Sam; these taxes are automatically taken out of your paycheck. According to the IRS, however, if you are in business for yourself, you generally need to make estimated tax payments. These estimated taxes are used to pay not only income tax but also other taxes such as self-employment tax and alternative minimum tax.

When to Pay Estimated Quarterly Taxes

Estimated tax payments are due on the 15th of April, June, September and January of each year. However, the deadline is moved to the next business day if that date falls on a Saturday, Sunday or federal holiday. For 2016, estimated quarterly taxes are due on: April 18, June 15, Sept. 15 and Jan. 17, 2017.

Where to Pay Estimated Quarterly Taxes

Good news is that the IRS makes it quite easy to pay quarterly tax online, by phone or through snail mail. In my opinion, the easiest way to make payments is through the online EFTPS (Electronic Federal Tax Payment System) service. It’s a quick, free and user-friendly option, and the site maintains a record of payments so you can track how much and when you made payments throughout the year. Done and done.

Why it’s Important to Pay Estimated Quarterly Taxes

Plain and simple: You want to be a responsible business owner and it’s required by the government. Besides, there is always the looming dread of a penalty from underpayment, should you choose to forgo paying quarterly taxes. Kasperik says freelancers will be charged a penalty for not having paid enough tax throughout the year and if they end up owing a large balance when a tax return is filed. The penalty, he says, is basically an interest rate calculated based on the number of days a payment is late and/or how short a payment is from the date it should have been made.

And what freelancer has the time and extra cash for that? Not me.

How Much To Pay In Estimated Quarterly Taxes

Freelancers can use the Form 1040-ES to determine estimated tax. Each freelancer’s financial and tax circumstances are unique to his or her business, Kasperik says. For example, tax credits that might apply to one individual may not apply to another.

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Generally, the IRS says that if you pay at least 90 percent of the tax for the current year or 100 percent of tax shown for the year prior, whichever is smaller, you are good to go. If you over or underpay (it is an estimate after all), that’s OK — you can always adjust each payment based on estimated income as you go throughout the year, or you’ll receive a refund (or owe money) at the end of the year during the annual tax filing period in April.

Freelancers Union offers tips for how much to pay in estimated quarterly taxes, or you can consult with a tax professional for more details

Taxes can be complicated, yes; especially the first few years of going through the process as a freelancer. And it doesn’t stop there, as there are always new tax considerations to think about as your business grows and tax demands change. Once you get the hang of it — or reach out to a tax professional for support, which I highly recommend — paying your estimated quarterly taxes will become just one more thing on your checklist as a savvy freelancer and business owner.

Follow Cherise’s journey every month as she navigates the freelance life.