Understanding Estimated Taxes for Private Practice Owners

Julie Herres
Sep 16
5 min read

Updated: Sep 19

Why they matter, how they work, and what your accountant really needs to know to help!

Taxes might not be the most glamorous part of running a private practice, but they’re a critical part of making sure your business stays healthy, sustainable, and profitable.

If you’re a therapist in private practice—whether solo or group—there’s a good chance you’ve heard the term “estimated taxes.” But what exactly are estimated taxes? Why are they so important? And why do they never seem to match what you owe at the end of the year?

Let’s break it all down, in plain English, no jargon, and absolutely no shame.

What Are Estimated Taxes?

Estimated taxes are exactly what they sound like: an estimate of the taxes you’ll owe throughout the year.

If you’re an employee, your taxes are automatically withheld from your paycheck. But once you become a business owner (like running a solo or group therapy practice), that withholding disappears. That means you are responsible for paying your own taxes—quarterly.

These payments are due in four chunks throughout the year (if these dates fall on a weekend or holiday, the deadline shifts to the next business day):

April 15
June 15
September 15
January 15 (of the following year)

They cover three major things:

Federal income tax
Self-employment tax (Social Security and Medicare)
State income tax (depending on your state)

Why You Have to Pay Them

Short version? The IRS doesn’t want to wait until April to get paid.

If you’re earning income throughout the year, they want you to pay as you go. If you don’t, you could be hit with penalties and interest—even if you ultimately pay everything by April 15.

This applies to:

Solo practice owners
Group practice owners
Therapists receiving 1099 income
Anyone not having taxes withheld from their paycheck

How Estimated Taxes Are Calculated

Here's where it gets a little tricky.

Estimated tax payments are usually based on your previous year’s tax return. If you made $100,000 in profit last year, your accountant might project similar profit for this year and calculate your estimated payments accordingly.

This means you’re basically saying:

“If this year is like last year, here’s what I’ll owe.”

It’s not a crystal ball (and it doesn’t need to be), but it’s a solid starting point.

Here’s a super-simplified example:

You made $100,000 in profit last year.
Your total tax rate is estimated at 30%.
Your total tax liability would be about $30,000.
Divided over four quarters, that’s $7,500 per estimated payment.

That sounds reasonable, right?

Except…what if this year is nothing like last year?

Why Estimated Taxes Will (Almost) Never Be Perfect

Your estimated taxes are just that—an estimate. So don’t be surprised if your final tax bill is higher (or lower) than what you paid in quarterly payments.

Here’s why they rarely match up exactly:

1. Your Profit Changed

If your practice grew (yay!) or had a slow season (also okay), your income—and therefore your taxes—will change.

2. You Hired or Lost Team Members

Hiring a team, losing a clinician, adding billers or admin staff… all of these affect your bottom line, and therefore your tax liability.

3. You Made Large Business Investments

Did you sign a lease on a new office, invest in a new coaching program, or pay for a big rebrand? These expenses might reduce your taxable income—meaning your estimated payments were too high.

4. Life Happened

Maybe you had a baby, bought a house, started another business, or your partner changed jobs. Personal changes can have just as much tax impact as business changes.

Here’s the Good News: You’re Not Doing Anything Wrong

It’s completely normal for estimated taxes not to line up perfectly. That doesn’t mean you messed up—it just means you’re a business owner with a dynamic life and practice. 🙌

Still, if your income or expenses shift significantly during the year, it is worth revisiting your estimated tax payments.

When to Reach Out to Your Accountant

The biggest mistake practice owners make? Waiting until tax season to talk about changes.

Please don’t wait.

Your accountant can only help you adjust your estimated taxes if they know what’s going on. So, make it a habit to reach out any time one of these happens:

✅ You expect a big income jump (or drop)

✅ You or your partner have a major life change (new job, baby, move)

✅ You feel like you’re making more money (even if you haven’t run the numbers yet)

It’s also a good idea to give them a heads of when this happens:

✅ You hire or plan to hire a new clinician

✅ You lose a team member (or two)

✅ You launch a new service line or location

A quick email or 15-minute check-in now could save you from a 5-figure surprise later.

The Importance of Proactive Tax Planning

Estimated taxes are just one part of a bigger picture—what we call proactive tax planning. Instead of only looking backward at what happened last year, we help our clients look forward to what’s coming next.

We get it: tax season already feels like a lot. But with proactive planning, you can:

Avoid surprise tax bills
Reduce (or eliminate) penalties
Pay yourself with confidence
Sleep better at night (no exaggeration!)

A Quick Note on Profitability and Paying Taxes

We know taxes can feel like a burden. But here’s our unpopular opinion (that we stand by wholeheartedly):

Paying taxes is a sign that your business is profitable—and that’s a good thing.

If you’re paying no tax, that probably means you’re making no money. And that’s a bigger problem.

Don’t aim for “zero taxes”—aim for profitable growth, with smart, proactive strategies to manage what you owe.

Final Thoughts: No Shame, Just Strategy

If estimated taxes confuse you—you’re not alone.

If you’ve never made a payment on time—you’re still not too late.

And if your estimated tax payments have been wrong every year? Welcome to the club.

But you can take control of this part of your business. And we’re here to help.

Whether you’re a solo practice owner navigating this for the first time or running a multi-state group practice, GreenOak Accounting has the expertise (and the empathy) to help you get your numbers right.

💡 Ready to stop guessing and start planning? Book a consultation with our team today and let’s get proactive with your taxes: 👉 GreenOakAccounting.com/Consultation

📝 Want to DIY your tax knowledge first? Check out our self-paced course All About Taxes, built specifically for therapists in private practice

This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney, or advisor regarding your particular facts and circumstances.

GreenOak Accounting specializes in working with private practice owners across the United States. For more information on our services, visit our website.