A self-employed contractor operating as a sole proprietor with no withholding generally must make federal income tax payments to the IRS:
Explanation
With no employer withholding, IRC §6654 requires a sole proprietor to pay income tax and self-employment tax in quarterly estimated instalments as the income is earned, and an underpayment brings a penalty even if the April return is paid in full. Paying only in April therefore leaves the penalty in place. A W-2 is a year-end wage statement for employees and has no monthly payment attached. And waiting for a sale of the business ignores tax on the annual profit entirely.
Law Reference: IRC §6654; IRC §1401This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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