How do you know you're setting aside enough?
You compare two numbers every quarter: what you've paid in so far, and what you'll owe for the year. This guide from Elite Accounting Services in Greenville uses the tax year 2026 rules, read from the IRS and NCDOR pages linked beside each one in October 2026. Last year's return gives you the safe number. This year's books give you the real one. If what you've put away covers the smaller of the two, you're generally fine on the federal side.
The federal test comes from the IRS estimated taxes page: most people avoid the underpayment penalty if they owe less than $1,000 after withholding and credits, or if they paid at least 90% of this year's tax or 100% of the tax on last year's return, whichever is smaller. The same page says sole proprietors, partners and S corporation shareholders generally have to make estimated payments if they expect to owe $1,000 or more when they file, which covers a Farmville owner whose business profit lands on their own return.
Why does this matter in Farmville?
Not every business in Farmville, about eight miles west of Greenville, earns evenly through the year. A downtown shop can have quiet weeks and then a busy stretch around the Dogwood Festival in spring. Farm income, in a town that took its name from farming, tends to arrive in a short run after harvest. Setting aside a flat amount each month assumes a smooth year, and a business that lives on a festival weekend or a harvest doesn't have one.
None of that changes the due dates, only how you work out each payment.
Which method fits your year?
Find the row that sounds like your business this year. The middle column is where to start, and the last column is the catch.
| Your year | What to base payments on | What to watch |
|---|---|---|
| Profit about the same as last year | A quarter of last year's total federal tax each due date | The higher-income rule in IRS Publication 505 |
| Profit clearly up on last year | Last year's tax as the floor, plus extra set aside | A bigger balance due in April even with no penalty |
| Profit clearly down on last year | This year's books, refigured each quarter | Paying more than you need to on last year's number |
| Seasonal or festival-heavy income | The annualized income installment method | Form 2210 has to be filed with the return |
| At least two-thirds of income from farming | The special farmer rules the IRS and NCDOR each set out | Federal and state farm rules are set out separately |
| No tax owed at all last year | This year's books only | The federal exemption has three conditions, not one |
How do you turn last year's return into a set-aside rate?
Take last year's total federal tax and your North Carolina tax, add them, and divide by last year's business profit. That gives you a rough share of each profit dollar that went to tax. Move that share of every month's profit into a separate savings account when the books for that month are closed, and pay the estimates out of it.
This is a starting rate, not a rule. If this year's profit is running well ahead of last year's, the share you need may rise, because more of the extra income can fall into higher brackets. That's why the rate gets checked against this year's numbers every quarter rather than set once in January.
There's one more federal wrinkle. IRS Publication 505 says that if your 2025 adjusted gross income was more than $150,000, or $75,000 if married filing separately, you use 110% of last year's tax instead of 100% to stay in the safe zone for 2026. That rule doesn't apply if at least two-thirds of your gross income is from farming or fishing.
Not sure your set-aside is keeping up?
Call (252) 916-3278 or book a free consultation and bring last year's return and this year's profit and loss.
When are the 2026 payments due?
For tax year 2026, Publication 505 lists federal due dates of April 15, June 15 and September 15, 2026, and January 15, 2027. The NCDOR estimated income tax page gives the same four dates for most calendar-year filers, so one reminder can cover both. With the September payment behind you, the next one is January 15, 2027. If a date lands on a weekend or legal holiday, the IRS treats a payment made the next business day as on time.
The January payment has an escape hatch on both sides. Publication 505 says that if you file your 2026 return by January 31, 2027 and pay the rest of what you owe, you don't need to make the January 15 payment, and NCDOR states the same rule for the state.
What does North Carolina expect?
North Carolina runs its own test. NCDOR says you're required to pay estimated income tax if the tax on your return, after North Carolina withholding and credits, is $1,000 or more. Each payment goes in with Form NC-40, and it can be paid online. If you don't pay enough, the state charges interest for the underpayment, figured on Form D-422.
The state has a farm rule that matters around Farmville. NCDOR says that if at least two-thirds of your estimated gross income is from farming, you can pay the estimate any time on or before January 15 of the following year, and if you file Form D-400 and pay the total tax by March 1, you don't have to make an estimated payment at all.
What if your income comes in lumps?
Then equal quarterly payments may ask too much of you in the slow months. Publication 505 describes the annualized income installment method for exactly this: the tax for each period is worked out from what you actually earned up to that point, so a quiet first half can mean smaller early payments and larger later ones. If you use it, you have to file Form 2210 with your return.
This method only works if the books are current. You need a profit figure at the end of each period, which means bank accounts reconciled and income recorded month by month, not pieced together in March. If your books are behind, getting the bookkeeping caught up comes before any of this.
Talking it through
Quarterly estimated tax support is part of the tax work we do for businesses in Greenville, Farmville and the towns around them. If you'd like to know who you'd be talking to first, our About page covers it. Office hours are Monday to Friday, 8am to 5pm. Call (252) 916-3278 or get in touch to book a free consultation before the January 15 payment comes due.
