I would take a strong look at incorporating yourself as a business entity. Typically you will receive more tax advantages and benefits plus you can deduct a lot more. Before I incorporated, I used to have a savings account that I’d contribute to which would cover my annual tax bill. These days my company pays estimated taxes on a quarterly basis.

But by far the best advice is to hire a CPA to do your taxes annually. They may be able to get greater deductions and write offs than you can on your own plus if you do have an audit, they will be there to help in the process.

My wife and I are going through the same thing. All the information and laws are overwhelming, so the best thing to do is find someone who’s job it is to know all of that stuff. With all the different state and city laws, an accountant would be your best option.

If you want to do it yourself, the IRS has tax seminars which you can attend and learn more about taxes. Also, your state will most likely have seminars on taxes, which you can attend and get some one on one help. Some states, like Washington State, offer to send out a representative to look at your business and help you decide what you will need to pay, how to pay, what to save, etc. Find the number to your local IRS (google IRS office for more info.

I hope that helps, a little. As a new business owner the only thing that stumps me are tax laws. So I understand your frustration and wish I could give you a simple answer.

I understand your frustration when it comes to figuring out what your feral/state/local tax liability is and how to pay it.

Although the process is not easy, here is the bottom line: you need to estimate your yearly net income (gross income-expenses); apply your tax rate (this is more complicated than it sounds since you have to take all the things in your “tax life” into consideration); and divide the result into number of payments left till the year end(if you do it at the beginning of the year, divide into 4). Your quarterly estimated tax amount is ready… You can pay it either by check or online.

I would recommend you talk to a tax professional, who can help you out with the process. It may sound easy but, as I stated before, there are many moving parts when it comes to projecting your tax liability. I hope my post clarified at least the mechanics of estimated tax.