Monthly Tax Reserve System

How It Works

1. Personalized Calculation: We determine your specific tax reserve percentage based on your federal and state tax brackets. This percentage is then multiplied by your year-to-date profit to calculate your required tax reserve amount.
2. Monthly Deposits: Each month, you'll deposit the recommended amount into a dedicated tax reserve account. We recommend using Relay Financial for this purpose.
3. Regular Reporting: You'll receive monthly statements showing your current tax reserve balance, representing the amount you should have set aside as of the report date.
4. Quarterly Payments: Before each quarterly tax deadline, we'll send you a notification through your client portal with the exact payment amount due. These payments are typically due on:
   • 1st Quarter: April 15
   • 2nd Quarter: June 15
   • 3rd Quarter: September 15
   • 4th Quarter: January 15 (of the following year)
5. Payment Tracking: When you make your quarterly tax payments, we'll log them in our system and reset your tax reserve balance to zero for the next quarter.

Bi-Annual Comprehensive Tax Planning

In addition to the monthly tax reserve system, we conduct comprehensive tax planning twice per year, which will true up the amount you have paid into the full tax burden when we complete a full tax plan. This Monthly / Quarterly /Bi-Annual process makes sure that cash flow and estimated tax payments are more aligned

January Tax Planning

In January, we'll:

• Pull all financial data from the prior year to ensure all estimated tax payments made have covered your full tax liability
• Verify that all quarterly estimated payments were properly applied to your tax account
• Review your previous year's financial performance
• Analyze any tax law changes that may affect your business
• Assess your tax situation for the upcoming year
• Send you a detailed questionnaire about any anticipated changes in income, investments, or business activities
• Adjust your tax reserve percentage if necessary based on our findings
• Provide strategies to optimize your tax position for the new year

June Tax Planning