Quarterly estimated tax payments must amount to either 90% of the current year's tax obligation or 100% of the previous year's. Otherwise, penalties and interest average about 14% of the unpaid balance.

The best approach is to project current profit each quarter and deposit 100% of anticipated taxes. (Remember that the final payment has to be made by January 15.) At a minimum, pay what you paid last year, but you may overpay if this year's profit is less than last year's.

If you miss payments during the year, you may not have enough cash to pay the full amount in one final payment. You can elect to pay off the balance over 12 to 36 months, but you must file Form 9465 and include the first installment. You'll still pay a penalty, but not as much as when paying nothing at all.

--Howard Scott is a business writer and small business tax preparer in Pembroke, Mass.