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Money · 8 min read

Taxes for people who'd rather not think about taxes.

The short answer

Set aside 25–30% of profit in a separate account from day one, pay US estimated taxes quarterly once you're profitable, let your payment platform handle sales tax where possible, and hire an accountant the moment revenue is real.

How much should I set aside for taxes?

25–30% of profit (not revenue), moved to a separate savings account every month, automatically. If your effective rate ends up lower, you get a bonus in April instead of a bill.

The separate account is the whole trick. Money you can see in your main balance is money you'll accidentally spend.

When are estimated taxes due?

In the US, quarterly: roughly April 15, June 15, September 15, and January 15. You owe them once you'll owe more than $1,000 for the year, which for most subscription businesses is the first profitable year.

Missing a quarter isn't fatal, the penalty is interest, not jail, but set calendar reminders and stop thinking about it.

What about sales tax on subscriptions?

Software subscriptions are taxable in some US states and most of the EU (as VAT). The practical answer: use a payment platform that calculates and remits it for you as merchant of record, or turn on your processor's tax product. Doing it manually across jurisdictions is a full-time job you didn't sign up for.

When do I need an accountant?

  1. 1Get one when revenue passes roughly $2–3K/month, when you form an LLC or corporation, or when you sell into the EU, whichever comes first.
  2. 2Expect a few hundred dollars for a return, more with bookkeeping. They typically save more than they cost, in deductions and in evenings.
  3. 3Keep books current monthly (an afternoon with any bookkeeping tool). Handing an accountant clean books is the difference between a bill and a big bill.
FAQ

Quick answers.

Do I need an LLC to start?

No, you can start as a sole proprietor and form an LLC when there's revenue to protect. Talk to a professional about your situation; this guide isn't legal or tax advice.

Can I deduct my laptop and software subscriptions?

Generally yes, if they're for the business, hardware, software, a home-office portion. Keep receipts and let your accountant sort categories.

What happens if I just... don't file quarterly?

You'll owe the tax plus a modest interest penalty at year-end. Not catastrophic, but it compounds with silence. File, even if imperfectly.

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