# Quarterly taxes for a solo practice

> **Not legal, tax, clinical, or compliance advice.** This is the working understanding I reached in my first year of practice in Washington and Rhode Island. Use it to have a sharper conversation with a certified public accountant (CPA) rather than to replace one.

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## What you owe, in layers

As a single-member limited liability company (LLC) or sole proprietor, practice profit flows onto your personal return and is taxed in layers:

| Layer | Roughly | Notes |
|---|---|---|
| **Self-employment tax** | ~14.1% of net | 15.3% × 92.35% of net earnings; the Social Security part stops at the annual wage base |
| **Federal income tax** | your marginal bracket | The Qualified Business Income (QBI) deduction may reduce it |
| **State income tax: Washington** | **none** | Washington has no personal income tax |
| **State income tax: Rhode Island** | ~3.75%–5.99% | Graduated brackets; your rate depends on total household income |

Rough combined rate on practice profit: **about 25% to 35% in Washington** and **about 30% to 40% in Rhode Island**.

## Washington-specific things to ask about

No income tax, but its own business taxes and registrations. Ask your CPA or check dor.wa.gov:

- **Business license / registration** with the Department of Revenue (DOR), if your income is above the threshold.
- **Business & Occupation (B&O) tax** on *gross receipts*. Many small practices owe little or nothing after the small business credit but may still need to file, at a frequency DOR assigns.
- **City business license:** Seattle and several other cities require their own.
- **Paid Family & Medical Leave:** optional elective coverage for the self-employed.
- **WA Cares Fund:** self-employed people aren't automatically covered; opting in is a separate decision.

## Rhode Island-specific things to ask about

Ask your CPA or check tax.ri.gov and the Secretary of State:

- **RI estimated income tax payments:** quarterly, alongside the federal ones.
- **LLC annual report** and filing fee, due each year to the Secretary of State. Missing it can eventually cost the LLC its good standing.
- **Minimum business tax:** historically charged to LLCs annually; confirm whether it applies to a single-member LLC in your year.
- **City or town requirements:** generally lighter than Washington's, but worth one question.

## Paying federal (and RI) estimates

Four payments a year via **IRS Direct Pay** or your Internal Revenue Service (IRS) online account (choose "1040-ES estimated tax"). Rhode Island estimates follow essentially the same dates, paid through the RI Division of Taxation.

| For income earned | Due |
|---|---|
| Jan – Mar | April 15 |
| Apr – May | June 15 |
| Jun – Aug | September 15 |
| Sep – Dec | January 15 (next year) |

The quarters are uneven, and a date on a weekend or holiday moves to the next business day.

## Two ways to size the payments

**1. Safe harbor (simplest in year one).** Pay at least **100% of last year's total federal tax** (**110%** if last year's adjusted gross income (AGI) was over $150,000), split across the remaining quarters. There's no underpayment penalty however this year turns out; you settle the difference in April.

**2. Current-year estimate.** Project this year's profit, apply your rate, and divide by the remaining quarters. More accurate, but easier to get wrong while income is ramping up.

## Setting money aside

A common starting rule is to move a fixed share of every deposit to a separate tax savings account: about **25% to 30% in Washington** or **30% to 35% in Rhode Island**.

> **My first-year lesson:** a flat percentage can badly *over*-reserve if your household has other income with withholding, such as a spouse's W-2 or a W-2 job you're winding down. That withholding may already cover most of the tax. Once a CPA has seen the whole household, a **fixed monthly transfer** (e.g. $X/month) funding a **fixed quarterly payment** often works better, with the percentage kept as a yearly sanity check.

Record the transfer in your [monthly close](https://toolkit.marcusberley.com/monthly-close/), and the payment as an owner equity/draw item, since income tax on your own earnings isn't deductible.

## Deductions to track from day one

Ask your CPA which apply:

- **Home office:** simplified method ($ per square foot, capped) or actual expenses (a share of rent/mortgage interest, utilities, insurance). Give home-office costs their own expense category.
- **Business mileage:** only with a contemporaneous log (see [CE tracking and practice logs](https://toolkit.marcusberley.com/ce-tracking/)).
- **Health insurance premiums** for the self-employed.
- **Retirement contributions:** SEP-IRA or Solo 401(k).
- Licenses, continuing education (CE), malpractice insurance, your electronic health record (EHR) system, directory listings, professional memberships, consultation/supervision you pay for, and equipment.
- **Startup costs** incurred before you opened.