Help, I Didn't Plan and I Owe Alot of Money!

You're a business owner and you've had a really great year and you've made more money than you've ever made before.

The bad news is you didn't plan for the tax liability that would result. Now I've been there myself. The first year that I actually made a little bit of money I had a huge tax bill when I did my tax return that year. It was a big surprise to me. There are some things you can do to prepare for this and then there are some things you can do if you find yourself in that situation. First of all, to prepare yourself, if you're a small business owner you want to be taking your income every quarter and paying estimated taxes if you are not otherwise withholding taxes by payroll or otherwise. If you don't and you do have a profit, you're almost certainly going to owe taxes at the end of the year and if you made a lot of money, that can be a big deal. Now if you don't pay estimated taxes that first year that you have a really great year in business, if you can't full pay that liability when you file your return as I've mentioned in other areas of the site, you can full pay in 120 days. The IRS is pretty easy going about that. If you need to, you can set up an Installment Agreement with them depending on your ability to pay and what your specific financial ability is but by all means you want to start taking the steps to avoid that happening in the future.

So if you're a business owner and you're making money, you want to be putting aside at least 25 percent every quarter to go toward your tax liability so that you won't get a surprise tax bill when you file your tax return.