When clients come to me and tell me that they would like to start a business, I try to visit with them about setting aside money for taxes. The most common problem I see is when a business owner does not set aside enough money to pay his or her individual income taxes, especially when that person is used to having an employer withhold taxes from his or her paycheck. The sticker shock of having to come up with a lot of money to pay the taxes and a penalty the following April is one you want to avoid.

Unfortunately, even in the years that your business does not make much money, there are taxes that need to be accounted for and paid, including:

• Individual income taxes
• Employment/payroll taxes for your employees
• Collection of sales and use taxes on your sales
• Excise taxes

Once you decide what taxes you may need to pay, you need to make sure you have allocated enough money to pay those taxes when they are due.

If you are taking a 'draw' from the business, I suggest that you deposit the entire amount of the draw into a 'tax savings account' and then transfer no more than 70% of that draw to your household account. Do not put the money in the household account first, as the chances of the money ever being transferred to the tax savings account are significantly reduced once the money is in your household account.

Use the tax savings account only for taxes, and make quarterly estimated tax payments, based on your accountant's suggestions from the amount you have kept in the tax savings account.

If you are not taking a draw from the business, keep an eye on your net income so you know what your net income will be, as this is what you will be taxed on. In other words, keep enough money in the business account to distribute taxes to you at the time they are due, and to pay estimates along the way.

If are behind in paying your taxes, get help! Do not let it get worse and fail to file your tax return just because you don't have the money to pay. The penalty increases to up to 25% of the unpaid tax (plus interest) if you do not file a return. If you file a return and do not pay the tax that is due, the penalty is closer to 5% (plus interest).