The first time a small business owner gets their tax return, they may be in for a shock: they’ll almost always have to pay taxes! Why? Because they may not have set up estimated taxes. Many small business owners, especially those that provide services, work as independent contractors at first. This means no taxes are taken out of their pay checks. Many small business failures come from not being prepared for this. The payment a small business owner takes from the business is considered an advance on earnings, and most owners don’t take social security or other taxes out of these advances. What they need to do is set up quarterly estimated payments. These payments are deposits made to a specific bank account. At the end of the year, this account is used to pay any taxes owed. If you don’t have one of these accounts set up, a CPA can assist you in estimating what your taxes will be and help you prepare for tax season. Most would agree that it’s better to pay a little bit every three months than to be hit with a large tax bill at the end of the year.