Estimating quarterly taxes: A simple guide for tour and activity operators

As a tour or activity operator, you probably deal with seasonal income, busy months, and slower periods. That fluctuation can make it harder to stay on top of taxes, making quarterly payments even more important. Estimated taxes help you spread out what you owe and avoid an unexpected hit at the end of the year.

In this guide, we’ll walk through what quarterly taxes are, why they matter, and how to estimate and pay them, without the stress.

FareHarbor B.V. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before taking any tax action.

Why quarterly taxes matter

Estimated quarterly taxes are advance payments on the income tax you expect to owe for the year. The IRS requires many small business owners, freelancers, and independent contractors to make these payments throughout the year, not just when they file in April.

The U.S. tax system operates on a “pay-as-you-go” model. That means taxes are due as income is earned, not just once a year. Traditional employees have taxes withheld from every paycheck. But if you’re self-employed or run a tour business, that responsibility falls on you.

Skip these payments, and the IRS may charge interest and penalties — even if you end up paying your full tax bill later. Worse, you could face an unexpected lump sum at tax time, throwing off your cash flow when you need it most.

Running a tour or activity business often means dealing with uneven income. You may earn the bulk of your revenue during peak months, then slow down in the off months. Without a plan, it’s easy to underestimate what you owe — or forget altogether. Quarterly tax payments help you stay in control, even when your income fluctuates.

Who needs to pay estimated taxes — and why

If you’re a sole proprietor, part of an LLC, in a partnership, or operating an S corporation with pass-through income, you likely need to pay estimated taxes. The general rule? If you expect to owe at least $1,000 in federal income tax this year, the IRS wants you to pay in quarterly installments.

This becomes especially relevant if you receive 1099 income or don’t have traditional payroll withholding. Many tour guides, boat captains, and activity operators fall into this category, especially if you hire seasonal staff or pay yourself through owner’s draws rather than a W-2 paycheck.

In short, if you’re running your business without a typical employer-employee setup, you’re probably responsible for making these payments.

Pro tip: Look at last year’s tax return. If you owe money and your business hasn’t changed much, chances are you’ll need to pay quarterly this year too.

How to calculate what you owe each quarter

To estimate your quarterly tax payments, start with IRS Form 1040-ES. This form includes a worksheet that helps you calculate what you’ll owe based on your expected income, deductions, and credits for the year.

There are two main methods you can use:

• The 90% rule: Pay at least 90% of what you’ll owe this year, spread out over four quarterly payments.
• The safe harbor rule: Pay 100% of what you owed last year (or 110% if your adjusted gross income was more than $150,000), regardless of what you expect to earn this year.

Let’s say your tour business owed $12,000 in taxes last year. If your income is roughly the same, the safe harbor method suggests you’d make four payments of $3,000 each quarter. If your revenue varies by month, especially during the off-months, you can adjust your payments to better match your actual earnings.

Pro tip: If your business is seasonal, estimate your full-year income in advance and adjust each quarter. It’s better to stay ahead than to scramble later.

Common mistakes tour and activity operators make

Even seasoned business owners can trip up when it comes to quarterly taxes. These are a few of the most common pitfalls and how to avoid them.

• Forgetting to plan for taxes during peak months: When bookings are flying in and your calendar is full, taxes often fall to the bottom of the to-do list. But this is when you likely earn the bulk of your income, and when setting aside funds is most crucial.
• Underestimating income or overestimating deductions: It’s tempting to be optimistic when projecting expenses, but rounding too far in your favor can lead to underpayment penalties down the road.
• Waiting until Q4 to calculate all your payments: Spreading payments across the year helps keep your cash flow steady. Trying to “catch up” in the final quarter usually ends in stress — or worse, missed deadlines.
• Skipping payments during slower months: Even if business is slow, you still owe taxes on what you earned earlier in the year. Missing a payment can trigger penalties and interest that build over time.

Pro tip: Set a calendar reminder at the start of each quarter. Staying consistent — no matter how busy or slow your month looks — helps keep payments manageable and your books in check.

Tools and strategies to automate your tax process

You don’t have to do quarterly taxes alone — or manually. The right tools and systems can help you stay organized, accurate, and on time.

• Use accounting software that tracks estimated taxes: Platforms like QuickBooks or Xero can calculate what you owe based on your income and even remind you when it’s time to pay.
• Open a separate savings account for taxes: Transferring a set percentage of your income to a dedicated tax fund helps avoid spending money you’ll owe later.
• Work with a tax professional who understands seasonal businesses: A CPA or tax advisor specializing in small businesses, especially those with inconsistent monthly income, can provide personalized guidance and prevent costly errors.
• Leverage FareHarbor’s financial reporting tools: Use revenue reports to track income trends, monitor monthly fluctuations, and better forecast what you’ll owe. These insights make estimating taxes in real time easier, not just at the end of the quarter.

Taxes? Tamed.

Paying quarterly taxes may not be the most exciting part of running your business, but it’s one of the most important. The good news? With the right tools and a bit of planning, it doesn’t have to be stressful or complicated.

Staying on top of your tax responsibilities helps you avoid surprises, protect your cash flow, and run a more sustainable business year-round.

Avoid nasty surprises and stay ahead of your cash flow — see how FareHarbor’s reporting tools can make quarterly taxes a breeze, book a free demo today.