Business Accountant Austin TX

We’re in the Spotlight: Insogna CPA Featured Partner of A2X

At Insogna CPA, we’re thrilled to share some exciting news: this month, we’re proudly featured as a partner in the A2X Directory.

For those who may not be familiar, A2X is a game-changer in the eCommerce world, making accrual financials for an online store a breeze.

As a licensed CPA firm, we’ve always been dedicated to providing top-notch, proactive services to our awesome eCommerce business owners who appreciate our timely communication, real-time financial updates, and proactive advisory and coaching guidance.

Being listed in the A2X Directory is a testament to our commitment to excellence in eCommerce accounting. We’re not just number crunchers; we’re your financial partners, here to help you navigate the complexities of your online selling business with confidence. Whether it’s strategizing your tax liabilities, forecasting your cash flow, or delivering weekly advisory meetings with you, we’re here to make sure you’re always proactively ahead of the curve.

We love working with A2X because, like us, they understand the unique needs of eCommerce businesses. Together, we ensure that your financial data is not only accurate but also actionable. So, if you’re an eCommerce owner looking for a CPA firm that’s as proactive as you are, why not see what we can do together?

Let’s chat about how we can help you. At Insogna CPA, we’re not just keeping up with the times—we’re setting the pace.

Need a proactive team helping grow your eCommerce business with you in real-time?

Let’s connect and explore how our team’s expertise, combined with A2X’s powerful tools, can help you thrive. Reach out today – our CPA team responds back asap.

Understanding your Form 1099-K: How IRS 1099 Rules Impact Your 2024 Taxes

In recent years, the IRS has fine-tuned the rules surrounding Form 1099, and 2024 is no exception. If you’re handling non-employee compensation, you’ll need to stay updated. The IRS continues to use Form 1099-NEC for reporting non-employee compensation, a change first made in 2020. Meanwhile, Form 1099-MISC has also seen its share of updates that you shouldn’t ignore.

What’s New for 2024?

The IRS has made some important tweaks to Form 1099-MISC for the 2024 tax year. One key change is that Box 13 is now dedicated to the Foreign Account Tax Compliance Act (FATCA) filing requirement. As a result, what were originally Boxes 13-17 have been renumbered to Boxes 14-18.

Here’s a quick rundown:

✅ Box 13: Use this to indicate FATCA filing requirements.
✅ Box 14: Report excess golden parachute payments.
✅ Box 15: Include payments under NQDC plans.
✅ Box 16: Report state-withheld taxes.
✅ Box 17: Include the payer’s state number.
✅ Box 18: Report state income.

❓ What’s the Deadline?

To avoid penalties, ensure you’re meeting the 1099 deadlines. Payers must issue Form 1099-MISC to recipients by January 31st. If you’re filing by paper, the IRS deadline is February 28th, while e-filing gives you until March 31st.

❓ Why e-File?

The IRS loves e-filing—and for good reason. It’s faster, more accurate, and lets you keep track of everything without dealing with a mountain of paperwork.

Don't let the IRS catch you off guard!

Navigating these IRS 1099 rules can be tricky, but you don’t have to do it alone. Let us help you with your tax preparation this year. Ready to make sure everything’s in order? Give us a call, and let’s tackle those 1099s together.

How to Pay Taxes: A guide to making payments to the IRS for your Federal Tax

If you aren’t one of those lucky Americans who get a tax refund from the IRS, you might be wondering how to go about paying your balance due.

Here are some electronic and manual payment options that you can use to pay your federal income tax:

📌 Electronic Funds Withdrawal – You can pay using funds from your bank account when your tax return is e-filed. There is no charge by the IRS for using this payment method, and payment can be arranged by your tax return preparer, allowing for the e-filing of your return and submitting an electronic funds withdrawal request at the same time.

📌 Direct Pay – You can schedule and make a payment directly from your checking or savings account using IRS Direct Pay. There is no fee for this service, and you will receive an email notification when the funds have been withdrawn. Payments, including estimated tax payments, can be scheduled up to 30 days in advance. You can change or cancel the payment up to two business days before the scheduled payment date.

📌 Electronic Federal Tax Payment System – This is a more sophisticated version of the IRS’s Direct Pay that allows not only federal income tax but also employment, estimated, and excise tax payments to be made over the internet or by phone from your bank account. The system includes a robust authentication process to ensure the security of the site and your private information. This is a free service. Payments, which can be scheduled up to 365 days in advance, can be changed or canceled up to two days before the scheduled payment date. You can use IRS Form 9783 to enroll in the system or enroll at EFTPS.gov – but do so well in advance of the date when a payment is due, as the government will use U.S. mail to send you a personal identification number (PIN), which you will need to access your EFTPS account.

📌 Send a Check – You can also pay the old-fashioned way by sending in a check along with a payment voucher. The payment voucher – IRS Form 1040-V – includes the information needed to associate your payment with your IRS account. IRS addresses for where to send the payment and your check are included with Form 1040-V.

📌 Pay with Cash – Taxpayers without bank accounts or those who prefer to pay in cash can do so at participating 7-Eleven stores. Taxpayers can do this at more than 7,000 locations nationwide. Visit IRS.gov/paywithcash for instructions on how to pay with cash. There is a small charge for making a cash payment, and the maximum amount is $1,000 per payment. Don’t wait until the last minute, as it can take up to a week for the IRS to receive the cash payment.

Other options to consider:

The IRS also has a mobile app that allows taxpayers to pay with their mobile devices. The IRS2Go app can be used to pay with either Direct Pay or by debit or credit card. IRS2Go is the official mobile app of the IRS and is available for download from Google Play, the Apple App Store, or the Amazon App Store.

If you are unable to pay the taxes that you owe, it’s generally in your best interest to make other arrangements to obtain the funds needed to fully pay your taxes, so you aren’t subjected to the government’s penalties and interest. Here are a few options to consider when you don’t have the funds to pay all of your tax liability:

📌 Credit Card – Another option is to pay by credit card using one of the service providers that work with the IRS. However, since the IRS doesn’t cover the credit card discount fee, you’ll have to pay that fee. You’ll also be responsible for the credit card interest on the payment.

📌 Installment Agreement – If you owe the IRS, you may qualify for a streamlined installment agreement that allows you to make monthly payments for up to six years. You’ll still be subject to the late payment penalty, but it will be reduced by half. Interest will also be charged at the current rate, and you’ll have to pay a user fee to set up the payment plan. By signing up for this arrangement, you agree to keep all future years’ tax obligations current. If you miss payments or have an outstanding past-due amount in a future year, you’ll be in default of the agreement, and the IRS can take enforcement actions to collect the entire amount you owe. To seek an installment agreement, the IRS will need to validate your financial condition and your need for an installment agreement through the information you provide in the Collection Information Statement (in which you list your financial information). You may also pay down your balance to take advantage of the streamlined option.

📌 Tap a Retirement Account – This is possibly the worst option for obtaining funds to pay your taxes because it jeopardizes your retirement, and the distributions are generally taxable at the highest bracket, adding more taxes to the existing problem. Additionally, if you’re under age 59.5, such a withdrawal is also subject to a 10% early-withdrawal penalty, which compounds the problem even further.

📌 Family Loan – Although it may be uncomfortable to ask, obtaining a loan from a relative or friend is an option because this type of loan is generally the least costly in terms of interest.

💡Your Decision to Make

Whatever you decide, don’t ignore your tax liability, as that is the worst thing you can do, and it can only make matters worse.

Need a hand navigating your federal tax payment options this year?

Don’t stress—reach out to us today, and let’s get your IRS account squared away with ease. Make 2024 the year you stay ahead of the game!

What Is a Bottom Line in Accounting, and Why Does It Matter for my Business?

Do you know if the accounting method you’re using is the right one for your business?

The difference between cash and accrual accounting lies in the timing of when sales and purchases are recorded. Cash accounting recognizes revenue and expenses only when money changes hands, while accrual accounting recognizes revenue when it’s earned and expenses when they’re billed (not paid).

The cash basis is easy to determine when a transaction has occurred (the money is in the bank or out of the bank) without the need to track receivables or payables. Since transactions aren’t recorded, per se, until the cash is received or paid, the business’ income isn’t taxed until it’s in the bank.

In the accrual accounting method, revenues and expenses are recorded when they are earned, regardless of when the money is actually received or paid. The upside is a more realistic idea of income and expenses during a period of time, providing a long-term picture that cash accounting doesn’t provide. The downside is it doesn’t provide any awareness of cash flow. Accrual basis accounting without careful monitoring of cash flow can have potentially devastating consequences.

💡 Tax Impact

Let’s say you own a business that sells machinery. If you sell $5,000 worth of machinery in December, under the cash method, that amount is not recorded in the books until the customer hands you the money or you receive the check.

Under the accrual method, the $5,000 is recorded as revenue immediately when the sale is made, even if you receive the money in January and thus pay taxes on it.

The same principle applies to expenses. If you receive an electric bill for $1,700, under the cash method, the amount is not added to the books until you pay the bill.

However, under the accrual method, the $1,700 is recorded as an expense the day you receive the bill.

❓Should I Use Cash or Accrual?

If your business is a corporation (other than an S Corp) that averages more than $25 million in gross receipts over the past three years, the IRS requires you to use the accrual method. If your business doesn’t hit those criteria, you can use the cash method.

Keep in mind that the IRS requires companies to use and maintain the same accounting method to report taxable income for a year—so no changing halfway through a tax year.

Some businesses can choose the hybrid method of accounting, wherein they use accrual accounting for inventory and the cash method for their income and expenses.

If you’re unsure of which accounting method is best for your business, speak with us.

Need Help?

Wondering how your accounting method impacts your bottom line? Let’s talk. We’ll help you choose the best approach to boost your company’s net income and keep your finances in top shape for 2024. Reach out today!

How an S-Corp Can Reduce Your Taxes in 2024

Most businesses begin as a sole proprietorship because it’s easier to start and requires less paperwork and regulatory overhead. It generally costs less than filing as a Limited Liability Company (LLC) or Incorporation (INC).

However, each of these legal statuses has certain tax strategy advantages, so it’s important to carefully consider which status is:

1️⃣ The best legal structure for your business goals.
2️⃣ The most tax beneficial, keeping more money in your pocket annually.

❓ LLC and Inc Can Elect S-Corp Status

If you choose an LLC or INC, you can elect for either entity to be treated as an S-Corp with the IRS for tax purposes. This election can save your small enterprise from paying more to the IRS.

💡 The Tax Advantage of S Corporations

For those choosing either the LLC or INC entity, S-Corp status allows the business to use “pass-through taxation” (i.e., business income goes directly to owners instead of the corporation). This allows the business and owner to potentially save money, avoiding the payroll taxes on LLC profits or the double taxation faced by INCs when distributing money.

📌 Brief Overview of an INC Structure

Protection from Liabilities
INC (Incorporated) status offers business owners (i.e., shareholders) the strongest protection from business liabilities, as it is a separate legal entity from the owners and shareholders.

Shares and Shareholders
With an INC, the business can also sell shares of stock and offer employees a stock option plan. INCs may have any number of shareholders. Note that most public companies you may hold shares of stock in are generally structured as an INC too.

C-Corp and Double-Taxation
Keep in mind that when setting up an INC, the IRS automatically treats the entity as a C-Corp, where all profits and losses flow to the corporation. Taxes are paid at C-Corp rates, and the only way to extract money for a shareholder/business owner is through dividends or W2 salary. This setup results in “double taxation”—first at the corporate level and again at the individual level on dividends and salaries. Electing S-Corp status allows you to avoid this by paying payroll taxes only on a reasonable W2 salary, with the rest taxed at your individual effective tax rate.

📌 Brief Overview of an LLC Structure

Brief Overview of an LLC Structure

Flexible Business Structure
A Limited Liability Company (LLC) is the most common alternative to the INC. The business structure of an LLC is more flexible than an INC, easier to maintain without the required annual meetings and minutes, and still provides a good deal of protection from legal liability, as long as the owner maintains a clear corporate veil by separating business and personal finances.

Less Paperwork and Administration
LLCs require less paperwork to form than S Corps. For one thing, there is no board of directors. The LLC’s owners just file the Articles of Organization for the LLC with the state agency. LLCs are then required to get an EIN from the IRS and maintain the necessary licenses and permits, just like INCs.

Tax Election Choices
An LLC has one class of shareholders/members and can choose how it will be taxed—Sole Proprietorship (SchC) filing, Partnership, S-Corp, or C-Corp. The tax election depends on your business and its needs. LLCs are generally classified as pass-through entities, with any profits and losses passing through to the members and reported on their personal tax returns unless they opt for C-Corp taxation.

❓ How Can Electing S Corp Status with the IRS Benefit Me?

S Corp Election Does Not Change the Business Legal Structure
Becoming an S-Corp is done strictly for tax purposes. A business stays the same legal structure of an INC or LLC, but by electing S-Corp status, the business can have its profits and losses pass through to individual tax returns, potentially saving on taxes.

Minimizing Payroll Taxes with S-Corp Status
The main reason for choosing to elect S-Corp tax status is to avoid paying payroll taxes on all of your profits and avoid double taxation. Instead, an S-Corp election allows business owners to pay themselves a “reasonable” salary, with payroll taxes only on that portion. This can be determined by taking an S Corp Compensation Test to figure out what the “reasonable” salary should be.

Is Electing S Corp Status the Right Choice for My Business?

S-Corp Is Not Ideal For Everyone
While all S-Corp profits and losses are passed through to an individual 1040, making the S-Corp election is not necessarily beneficial for all businesses. Startups looking to take on equity investment, businesses offering equity compensation, or partnerships splitting profits and equity interests are examples where an S-Corp election may not be the right choice.

Maintaining S-Corporation Tax Election
To maintain an S-Corp tax election, the business must be a U.S. LLC or INC with only one class of stock and fewer than 100 shareholders. All shareholders must be individuals, estates, or specifically qualified trusts. Each shareholder must consent in writing to the S-Corporation election, and each must be a U.S. Citizen or permanent resident alien with a U.S. Social Security number.

S Corp Must Have a December 31st Year-End
The tax year for an S-Corp must end on December 31st.

Changing Tax Election with the IRS
You can always update your tax election with the IRS at any time. There may be tax consequences for doing so, but it’s possible by a majority shareholder vote. Note that with the 199A (Qualified Business Income Deduction) deduction, electing S-Corp status could further maximize your tax savings depending on your industry.

Need Help?

We have been helping small business owners identify their business entities for over a decade. Plus, we advise on how to best set up your entity to maximize your tax benefits. Contact us today to start saving on your business and individual taxes tomorrow.

Offer in Compromise FAQs: Your Guide to Tax Relief

We’re all responsible for paying our fair share of taxes each year. But what happens when the amount you owe is simply out of reach? If your financial circumstances have shifted to the point where your cumulative debt is beyond your ability to pay, your best option for dealing with the IRS may be an Offer in Compromise (OIC).

The Goal of the Offer in Compromise

The Offer in Compromise, or OIC, was created to accomplish two goals:

✅ It allows American taxpayers who are unable to pay the full amount of their tax debt a way to negotiate a payment that aligns with their ability to pay.
✅ It provides the IRS with the ability to collect at least a portion of the amount owed to them.

The process is neither simple nor fast—it generally takes one to two years for both sides to agree on an amount to be paid. Even so, it has certain advantages for both sides.

An Offer in Compromise generally allows for a resolution to be accomplished outside of court, with the agreed-to payment reflective of income and assets rather than the actual amount of debt that has accrued. Though it may seem a loss for the IRS, the agency often recovers more through settling than they might through aggressive collection efforts.

Understanding the Available Offer in Compromise Options

Taxpayers interested in pursuing an Offer in Compromise generally have three different options available to them under federal law:

💡 Question the Debt: You can argue that you don’t owe the tax debt.
💡 Inability to Pay: You can show that your assets and income aren’t enough to cover the debt.
💡 Exceptional Circumstances: You can seek a compromise based on economic hardship or special circumstances, even if you owe the full amount. This falls under the category of “effective tax administration.”

🚩 Applying for an Offer in Compromise

The OIC process is both time-consuming and complicated. Applications require specific forms as well as extensive documentation, and all must be accurately prepared in keeping with IRS regulations. When mistakes are made or forms are incomplete, the applications are quickly returned without the benefit of a review. To minimize both delay and frustration, it is strongly suggested that taxpayers looking to avail themselves of an OIC employ tax professionals for both the preparation of their paperwork and the negotiation of its terms.

🚩 Not Every OIC Application is Approved

It is also important to remember that an application for an OIC by no means guarantees the desired outcome.

🚩 Use a Qualified Tax Professional

Submitting the specifics of your situation to a qualified tax professional will provide you with the ability to have your case reviewed by an expert who understands the process and the IRS criteria for approval, and who will be able to give you a reasoned perspective on the viability of your request.

Working with a professional will also provide you with reasonable expectations regarding the amount of time that the process will take and what your chances are of having your initial offer accepted. The program generally takes about two years from start to finish, and it is common for the IRS to make a counteroffer when the agency believes it will be able to collect more than the amount proffered by the applicant.

❓ How Much the Taxpayer is Able to Pay

In evaluating your case, the Internal Revenue Service will likely pay less attention to the actual amount that is owed than the amount that the taxpayer is able to pay. This determination will be made on the basis of numerous factors, including income, assets, previous earnings capacity, and anticipation of your earnings capacity in the future. Living expenses will also be taken into consideration.

💡 The Good News

The good news is that from the time that an application is sent in and while an IRS evaluation is taking place, most collection efforts are frozen. This generally provides tremendous relief from stress for taxpayers who have fallen behind in their payments and who feel unable to submit the amount that they owe.

Take the Next Step—Consult a Tax Expert Today

If you’re considering an Offer in Compromise, navigating this complex process on your own can be overwhelming. Contact us today to discuss your situation with a knowledgeable tax professional.

We’ll help you understand every step of the OIC process, prepare your application with precision, and advocate on your behalf during negotiations. Let’s work together to find the tax relief you need in 2024.