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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.
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. $X/month) funding a fixed quarterly payment often works better, with the percentage kept as a yearly sanity check.
Record the transfer in your monthly close, and the payment as an owner equity/draw item, since income tax on your own earnings isn't deductible.
Deductions to track from day one
Ask your CPA which apply:
- Home office: simplified method ($ 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).
- 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.