Summary of What This Blog Covers:
- Uncovers the Most Common Tax Mistakes Entrepreneurs Make
This blog reveals ten common ways business owners and self-employed professionals overpay on taxes from missing deductions and mixing personal expenses to overlooking asset depreciation and underutilizing retirement accounts. - Explains Practical, IRS-Compliant Fixes for Each Mistake
Entrepreneurs learn how to correct these tax errors with actionable solutions like switching to an S-Corp, implementing accounting tools like FreshBooks and WaveApp, or leveraging deductions for insurance, travel, and home office use. - Highlights the Value of Working with a Strategic CPA
The blog emphasizes the critical role of a certified public accountant in delivering proactive tax planning, entity structuring, year-round support, and multi-state compliance that DIY software and generic tax tools simply can’t provide. - Details the Essential Tax Forms Handled by Insogna CPA
From Form 1040 and 1065 to 1120-S, 1099-NEC, W-9s, and FBAR filings, readers get a snapshot of the key forms Insogna CPA manages for business owners. Helping them avoid errors, maximize savings, and stay fully compliant with IRS regulations.
Let’s be honest: entrepreneurs hustle. You’re leading meetings, hiring talent, chasing leads, and building something that didn’t exist before. But one of the biggest mistakes we see at Insogna CPA, a leading Austin, Texas CPA firm, is this:
You’re leaving money on the table. A lot of it.
Not because you’re careless. But because the U.S. tax system isn’t exactly user-friendly and generic tax software isn’t built for business owners with real operations, vendors, remote teams, and multiple income streams.
So whether you’re a seasoned CEO or a solopreneur scaling fast, here are 10 common ways entrepreneurs overpay on taxes and how to fix them before the IRS quietly thanks you for the donation.
1. Not Claiming the Home Office Deduction (Even When You Qualify)
If you run your business out of a home office but don’t deduct it, you’re overpaying. Plain and simple.
Why Business Owners Skip It:
- Fear of an audit (myth)
- Confusion over what’s deductible
- Software doesn’t prompt them clearly
What You Can Deduct:
- Rent or mortgage interest (pro-rated)
- Internet and utilities
- Repairs to your home office space
- Cleaning services or home insurance (portion)
How to Fix It:
- Use the simplified IRS method (based on square footage) or the actual expenses method
- Keep documentation (photos, floor plans, receipts)
- Work with a certified public accountant near you who knows how to claim this confidently without triggering red flags
A seasoned Austin, TX accountant can ensure you maximize this deduction legally, especially if you’re now permanently working from home.
2. Failing to Track Every Business Expense (Yes, Even the Small Stuff)
You’d be surprised how quickly the small stuff adds up—$15 lunches, $29 software subscriptions, $6 in parking. If it’s for the business, it’s deductible.
Why This Gets Missed:
- Lack of accounting tools
- Using personal accounts for business expenses
- Relying on memory or last-minute spreadsheets
The Fix:
- Use accounting software like FreshBooks, ZohoBooks, or WaveApp
- Maintain a dedicated business credit card or bank account
- Categorize expenses monthly, not just at year-end
Working with a small business CPA Austin entrepreneurs trust can help you keep things clean, accurate, and audit-ready.
3. Mixing Business and Personal Spending
You’re grabbing office supplies from Target, but you also pick up toothpaste. Or you use your personal card for a business dinner.
Why This Matters:
- You risk losing deductions if you can’t prove they were business-related
- Blurred lines = audit risk = stress
- It weakens your liability protection if you’re an LLC
The Fix:
- Set up separate financial accounts from day one
- Don’t mix receipts
- Reconcile monthly with the help of your CPA accountant near you
A taxation accountant can also go back and help you clean up past years because better late than never.
4. Ignoring Depreciation and Section 179 Deductions
You buy a laptop, camera, or equipment but instead of deducting it, it just… disappears from your books.
Depreciation Basics:
- Larger items should be depreciated over time
- But with Section 179, you can deduct the full cost in year one (if used more than 50% for business)
What You Might Miss:
- Business vehicle write-offs
- Office furniture or equipment
- Technology upgrades
- Leasehold improvements
A CPA in Austin, Texas will run a depreciation schedule for your business and help you choose the best timing for deductions especially if you’ve got a big year coming.
5. Overpaying in Self-Employment Taxes
Sole proprietors and single-member LLCs pay the full 15.3% self-employment tax (Social Security and Medicare) on every dollar of profit.
The Fix:
- Convert to an S-Corp and file Form 2553
- Pay yourself a reasonable W-2 salary (subject to payroll taxes)
- Take remaining income as distributions (not subject to SE tax)
This strategy can easily save $5,000 to $15,000 per year for profitable businesses and your Austin accounting firm can run the numbers to prove it.
6. Skipping Out on Retirement Contributions
Here’s a tax win with future-you written all over it.
Tax-Saving Retirement Options:
- Solo 401(k) – for solopreneurs and side hustlers
- SEP IRA – ideal for those with variable income
- SIMPLE IRA – a fit for small teams
Why It Matters:
- Contributions are tax-deductible
- It builds retirement wealth tax-deferred
- Reduces your adjusted gross income
With the guidance of a CPA certified public accountant, you can structure contributions to maximize both tax savings and long-term wealth.
7. Using the Wrong Business Entity
Still a sole proprietor even though you’re pulling six figures in profit? You’re probably overpaying.
Entities to Consider:
- LLC – Easy to form but taxed like a sole proprietor unless elected otherwise
- S-Corp – Ideal for active business owners with steady profits
- C-Corp – Best for businesses planning to raise capital or offer equity
Fix It With:
- An annual review of your entity structure
- Filing the appropriate IRS forms (like Form 1120-S)
- Advice from a chartered professional accountant who knows which structure suits your growth plans
8. Forgetting to Deduct Business Travel
Flights to conferences. Hotel stays. Rental cars. Even meals on the road. If you’re traveling for work, it’s likely deductible.
What to Track:
- Airfare, baggage fees, and transportation
- Hotel bills and lodging taxes
- Meal receipts (50% typically deductible)
- Mileage if you’re driving
Too many business owners fail to track this properly or don’t deduct it at all.
Work with your tax advisor near you to create a system, and you’ll stop leaving money on the tarmac.
9. Overlooking Insurance Deductions
You’re paying for general liability insurance, cyber coverage, and maybe health insurance too. Are you deducting them all?
What You Can Deduct:
- Health insurance premiums (for self-employed)
- Liability, errors & omissions (E&O), and malpractice coverage
- Business interruption insurance
- Cybersecurity or commercial vehicle insurance
How to Fix It:
- Gather your annual policy summaries
- Classify them properly in your accounting software
- Have your tax professional near you verify deductible eligibility
Your Austin tax accountant will make sure you’re not overlooking what could be thousands in annual deductions.
10. Filing Without Expert Guidance
This one’s the big one.
If you’re relying solely on DIY tax software, you might be saving money on a subscription—but costing yourself real cash in missed deductions, compliance mistakes, or worse… an audit.
The Fix:
- Get help from an Austin accounting service that works with business owners
- Partner with a tax consultant near you who offers year-round planning
- Avoid the April rush with quarterly reviews and proactive tax moves
A CPA firm in Austin, Texas does more than file. We help business owners thrive with insight, strategy, and real support.
Bonus: The Tax Forms We File for You (So You Don’t Have To)
- Form 1040 + Schedule C – For sole proprietors
- Form 1065 – For partnerships
- Form 1120-S – For S Corporations
- Form 2553 – To elect S-Corp status
- Form 1099 NEC / 1099-K – For contractors and platforms
- Form W-9 – For vendor setup
- Form 941 / 940 – For payroll tax compliance
- Form 1040-ES – Estimated taxes
- FBAR filing – For international accounts over $10,000
Your CPA office near you will ensure these are filed correctly, on time, and in full compliance with both federal and state tax authorities.
Let’s Stop Overpaying the IRS Together
You work hard. Your business is growing. And there’s no reason your tax strategy shouldn’t be growing with it.
At Insogna CPA, we help entrepreneurs build strategies that align with their business goals, minimize their tax liability, and create sustainable wealth.
Whether you’re running a solo operation or scaling fast with a team, our Austin CPA firm is here to guide you through every season of your business.
Book a consultation today and let’s make your taxes work as hard as you do...