Summary of What This Blog Covers:
- Understand why your current business structure might be costing you more in taxes: Many business owners stick with their original entity (like a sole proprietorship or LLC) without realizing it’s no longer the most tax-efficient option. This blog explains how restructuring, especially electing S-Corp status, can help reduce self-employment tax and optimize overall tax liability.
- Learn how to pay yourself the right way to avoid overpaying: From taking a reasonable salary under an S-Corp to reimbursing personal expenses properly and leveraging retirement contributions, this blog outlines smart compensation strategies that save money and ensure compliance.
- Avoid costly mistakes with inter-entity transactions and tax forms: Whether you own multiple businesses or work with contractors, this blog covers how to correctly document transfers, handle 1099 NEC and 1099K reporting, and manage W9 forms—all with help from a certified CPA near you.
- Stay compliant across state lines and international borders: Discover how multi-state operations and foreign financial accounts (like PayPal, Wise, or crypto) can trigger tax obligations and FBAR filing requirements, and how proactive, year-round tax planning from a trusted Austin CPA firm can keep you compliant and in control.
The Right Business Structure Can Save You Thousands
We’ve known each other a while, so let me ask you straight:
Are you still running your business with the same setup you chose when you filed your first LLC on LegalZoom… and haven’t thought about it since?
If you are and business is booming, you might be doing everything right except your tax strategy.
Because here’s the truth: choosing the wrong business structure, or not optimizing it as you grow, can cost you thousands in unnecessary taxes every single year.
At Insogna CPA, a top-rated CPA firm in Austin, Texas, we work with business owners across the service industry (consultants, creatives, agency founders, coaches, and more) who want to work smarter, not harder, when it comes to taxes.
Let’s walk through the key reasons you might be overpaying and how to build a tax-efficient structure that keeps more of your money where it belongs: in your business and your bank account.
Why Business Owners Overpay in Taxes (Without Realizing It)
It’s not that you’re ignoring the IRS—far from it. You’re filing on time. You’re trying your best with QuickBooks Self-Employed and maybe a 1099 tax calculator. But those tools aren’t telling you what you don’t know.
The Most Common Reasons You’re Overpaying:
- You’re still operating as a sole proprietor or single-member LLC, paying full self-employment tax on all your profits.
- You’ve outgrown DIY tools like TurboTax, but haven’t made the leap to work with a tax advisor near you.
- You’re paying yourself the wrong way, leaving money on the table.
- You haven’t reviewed your business structure in years.
- You own multiple businesses and are moving money between them without documentation or strategy.
These mistakes don’t just cause inefficiency, they create unnecessary risk and shrink your net income.
1. The Right Business Entity Can Save You Thousands
Let’s talk structure. Most business owners choose LLC status because it’s fast, flexible, and sounds official. But an LLC is just the beginning.
Entity Options to Consider:
- Sole Proprietor / Single-Member LLC: Simple, but you’re taxed on 100% of your profits. That means 3% self-employment tax on top of your federal income tax.
- S-Corporation: The IRS allows business owners to reduce self-employment tax by splitting their income into salary + distributions. This is where the savings come in.
- C-Corporation: Offers benefits if you’re raising capital or reinvesting in the business but watch out for double taxation.
We help you run these numbers using a self-employment tax calculator and assess when it makes sense to elect S-Corp status. If you’ve crossed the $50,000 profit mark, it’s time to evaluate.
2. How You Pay Yourself Matters A Lot
Once you’re making serious money, how you take income becomes just as important as how much you make.
Common Mistakes:
- Taking all profit as personal income (which triggers full self-employment tax)
- Paying business expenses from your personal account and not reimbursing yourself
- Forgetting to make retirement contributions, which could lower your taxable income
Smart Compensation Includes:
- A reasonable salary if you’re an S-Corp owner, issued through payroll
- Distributions for the remaining profit, which avoid self-employment tax
- An accountable reimbursement plan for personal expenses paid on behalf of the business
- Contributions to a Solo 401(k) or SEP IRA
We help clients set up compliant payroll, prepare W2 forms, and track W9 forms and 1099 NEC forms for contractors. As your certified CPA near you, we structure every payment to benefit you not the IRS.
3. Own Multiple Businesses? Don’t Overlook Inter-Entity Planning
A lot of our clients have more than one business: a consulting agency, a coaching brand, and maybe a product shop on Shopify. That’s great. But how you move money between those entities matters.
Inter-Entity Mistakes That Cost You:
- Failing to document loans or reimbursements
- Charging management fees without backing them up with actual agreements
- Misclassifying expenses, which can lead to double taxation or IRS scrutiny
What We Do:
- Help you structure intercompany transfers with clean accounting
- Document loans, fees, and reimbursements with IRS-friendly language
- Ensure you’re filing all necessary forms, including 1099 forms and keeping track of contractor payments
These are the kinds of details DIY tax software won’t catch but a chartered professional accountant at Insogna CPA will.
4. Don’t Forget the Forms, The IRS Won’t
If you’re paying contractors, processing payments through platforms, or holding money in international accounts, there are forms and filings you need to stay compliant.
Important Forms You Need to Know:
- W9 Tax Form: Collect this from any contractor you pay $600+
- 1099 NEC Form: Used to report payments to those contractors
- 1099K: If you receive payments through third-party platforms like Stripe or PayPal over $600
- FBAR Filing (FinCEN Form 114): Required if you hold more than $10,000 in foreign financial accounts (even temporarily)
Missing any of these? You could face penalties even if the error was unintentional.
Our team of tax professionals near you keeps your compliance clean and your filings current whether you operate locally or globally.
5. Multi-State? Multi-Problems… Unless You Plan Ahead
Let’s say your business is based in Texas (no income tax—high five!), but you’re selling to clients in California, New York, or Florida.
If you cross revenue thresholds in other states, you might trigger:
- Sales tax nexus
- Franchise tax obligations
- State income tax filing requirements
Every state is different. And if you’re shipping goods, teaching online, or working remotely, you may owe taxes in more places than you think.
As your Austin accounting firm, we help you:
- Register where necessary
- Stay under nexus thresholds where possible
- File appropriately when multi-state activity kicks in
6. International Accounts? You Might Need to File an FBAR
The FBAR (Foreign Bank Account Report) isn’t just for big corporations with offshore bank accounts.
If you have:
- More than $10,000 across any foreign accounts, including business checking, PayPal, or Wise
- Crypto wallets hosted on offshore exchanges
- Any joint foreign financial accounts
…you may be required to file FinCEN Form 114 annually.
Non-compliance can trigger penalties starting at $10,000 per violation.
Let a licensed CPA or enrolled agent from Insogna CPA handle this filing correctly, as part of your broader tax preparation services.
7. Tax Planning Isn’t One-and-Done
If your business is growing, your tax strategy shouldn’t be the same as last year. We see too many business owners only talk to their CPA once a year, usually in March or April, and get stuck reacting instead of planning.
What Year-Round Tax Planning Should Include:
- Quarterly Reviews: Income projections, deduction optimization, and payment planning
- Estimated Tax Payment Support: No more guessing, just clean numbers
- Retirement Contribution Strategy: Build wealth while cutting taxes
- Entity Review: Is your current setup still the most tax-efficient?
- IRS Notices: We handle those too, so you don’t have to sweat the fine print
We’re a CPA firm in Austin, Texas that believes in coaching not just compliance. You don’t just get tax prep, you get a partner.
Final Thoughts: Stop Overpaying and Structure Smarter
You’ve already put in the hard work to build a successful business. Now it’s time to make sure your structure, compensation, and compliance strategy match the level you’re operating at.
What We Do at Insogna CPA:
- Evaluate your business entity and recommend changes for tax efficiency
- Set up payroll, owner distributions, and reimbursement plans
- Handle tax filings: W9s, 1099 NECs, 1099K, FBARs, and more
- Guide you through multi-state and international compliance
- Provide proactive, year-round tax strategyno t just tax season stress
Whether you’ve been Googling “CPA near me” or asking around for a tax accountant in Austin who speaks fluent entrepreneur, we’re here for you.
Book Your Strategy Session Today
At Insogna CPA, we help small businesses across industries get their tax structures right and keep more of what they earn. Whether you’re self-employed, managing multiple LLCs, or just tired of sending more to the IRS than you need to, we’re here to help.
Schedule your consultation today with a team that doesn’t just prepare your taxes, we help you master them.
Because when your business structure works for you, your money works harder too.