This is one of the most vexing issues facing new business owners.  It’s very important to prepay the proper amount to avoid penalties and to avoid a shocking tax debt at year end.  Avoiding penalties requires that you meet one of two tests by year end: 1) You must have paid in at least as much as the actual tax from the previous year, or 2) You must have paid in at least 90% of this year’s actual tax.  Remember, this tax is calculated on the profits from your new business, and in combination with all other taxable income from other sources, so you must be able to approximate your business income as you progress through the year.  Many businesses will earn modest or no profits in the first year, but you must watch the issue carefully.  Typically you should review your profitability and your estimated tax status with your tax advisor before the end of each quarter until your business becomes stable and more predictable.