Business CPA

Summary of What This Blog Covers

• Why side business owners often miss key tax deductions.
  
  
• What expenses you can legally write off.
  
  
• How to track deductions and stay IRS-compliant.
  
  
• When to consider advanced strategies like S Corp election.

A Strategic Playbook for Side Hustlers Who Are Done Donating to the IRS

Here’s the truth most business owners don’t hear until they’re already overpaying: the IRS isn’t going to stop you from missing deductions. It’s not going to remind you what you could have claimed. And it’s definitely not going to reimburse you for missed opportunities.

That’s your job. And if you’re running a side business, whether it’s coaching clients at night, selling products on Etsy, or building digital services while holding down a 9-to-5, you have real tax obligations and, more importantly, real tax advantages.

But if you’re like most of the self-starters we work with at Insogna CPA, a trusted CPA firm in Austin, Texas, you didn’t get into business because you love accounting. You just want to keep more of what you earn, play by the rules, and stay one step ahead.

So here it is. A comprehensive guide on how to stop overpaying taxes, claim every legal business deduction, and treat your side hustle like the financial asset it is, not a tax trap.

Why Most Side Hustlers Are Overpaying Taxes Without Realizing It

You’re working nights. Maybe weekends. Building something on your terms. But when tax season rolls around, you treat it like a formality instead of what it really is: an opportunity.

Here’s how side business owners unknowingly end up funding the IRS.

1. Poor Expense Tracking

This is the number one culprit. Most side hustlers don’t have a clean system for separating business and personal spending. If you’re relying on memory or a messy folder of unlabeled receipts, you are missing write-offs. Period.

Missed expenses = inflated taxable income = more taxes owed.

2. Fear of the IRS

There’s this myth that taking deductions equals audit city. False. The IRS doesn’t mind deductions that are legitimate and documented. They do, however, get skeptical when your numbers are round, your records are vague, or your business structure is unclear.

3. Assuming “Small” Means “No Deductions”

If you’re making money, you’re running a business even if you’re still filing as a sole proprietor. And every business, no matter the size, is allowed to deduct ordinary and necessary expenses. You do not need to be incorporated. You do not need to earn six figures. You just need to operate like a business.

And businesses? They deduct.

What Can You Deduct? Let’s Break It Down

These are the most commonly missed, miscalculated, or misunderstood deductions we see when reviewing tax returns from new clients.

1. The Home Office Deduction

If you’re doing any part of your side hustle from your home (a desk, a spare bedroom, even the corner of your living room), you may be eligible.

Requirements:

• The space must be used exclusively and regularly for business.
  
  
• It must be your principal place of business (where admin or client work is done).
  
  

Calculation methods:

• Simplified method: $5 per square foot, up to 300 square feet.
  
  
• Actual expense method: Allocate rent, utilities, internet, and home insurance by square footage.
  
  

Working with a CPA in Austin, Texas ensures this deduction is done cleanly, maximizing savings and minimizing audit risk.

2. Software and Subscriptions

If you pay for tools that support your side hustle, they count. This includes:

• Accounting platforms like QuickBooks, Xero, or Wave
  
  
• Web hosting, domain registration, design plugins
  
  
• Email marketing software like ConvertKit, Mailchimp
  
  
• CRMs like Salesforce, HubSpot, or Pipedrive
  
  

If you use it to manage your business or generate income, it’s likely deductible. Your tax consultant near you can ensure it’s filed under the right expense category and doesn’t get lumped into personal use.

3. Business Meals and Networking

Meeting a client for coffee? Taking a mentor to lunch? Hosting a strategy session over takeout? All potentially deductible.

Key rules:

• Must be business-related
  
  
• Must include documentation: who, what, when, where, and why
  
  
• Most meals are 50% deductible
  
  
• Some in-office meals or team events may be 100% deductible
  
  

A tax preparer near you can help you differentiate between the two and keep clean records that the IRS respects.

4. Business Education and Development

Learning new skills to grow your business? The IRS actually wants to encourage that.

Eligible expenses include:

• Courses and webinars
  
  
• Industry certifications or CEU credits
  
  
• Books, podcasts, and digital training
  
  
• Conferences and trade shows
  
  

As long as the education relates to your current business, you’re in the clear. Just keep invoices and notes on how it supports your hustle.

5. Travel and Mileage

Driving to client meetings, sourcing products, attending a conference? That’s not just hustle, it’s deductible.

Two options:

• Standard mileage rate: 67 cents per mile (IRS 2025 rate)
• Actual expenses: Deduct gas, maintenance, insurance, and depreciation based on business use percentage.

Apps like MileIQ and Everlance help track automatically. A certified CPA near you will help you choose the method that gives you the biggest benefit.

6. Phone and Internet Usage

If you use your phone and internet for business, you can deduct a portion of those bills even if you don’t have separate accounts.

How it works:

• Estimate your percentage of business use (50%, 70%, etc.)
  
  
• Apply that to your monthly cost and deduct accordingly
  
  

And yes, if you have a separate business line, you can write off 100% of that cost.

How to Track It All Without Losing Your Mind

The key to claiming deductions isn’t just knowing what they are, it’s knowing how to document them.

Here’s how to make record-keeping automatic:

1. Separate Business and Personal Accounts

Open a business checking account. Use a dedicated credit card. This simple move prevents expense confusion and makes tax filing far easier.

2. Use Cloud-Based Accounting Tools

Software like QuickBooks, FreshBooks, or even Excel can track everything in real time. Just be consistent.

3. Save Receipts Digitally

Apps like Dext or Hubdoc can snap, store, and categorize receipts. The IRS requires documentation for most deductions, especially if you’re claiming actual expenses or vehicle deductions.

4. Track Mileage Automatically

Install a mileage tracking app. Logging trips manually is outdated and often inaccurate. Automation saves you time and money.

Your Austin, TX accountant can help set up these systems so you’re IRS-ready year-round.

Advanced Strategies: FBAR, Capital Gains, and Income Structuring

You’ve nailed the basics. Now let’s go deeper.

FBAR Filing: If You Have Foreign Accounts, You May Owe More Than You Think

If your side hustle uses foreign financial tools (PayPal linked to an overseas bank, crypto on international exchanges, or any foreign account exceeding $10,000), you must file an FBAR (FinCEN Form 114).

Non-filing penalties? Up to $10,000 per violation.

Work with an enrolled agent or tax professional near you to handle this. This is not something to DIY.

Capital Gains and Side Income

If you’re earning side income and investing, you could be paying more than necessary.

• Short term capital gains: Taxed at your ordinary income rate
  
  
• Long term capital gains: Taxed at reduced rates (0%, 15%, or 20%)
  
  

Strategically offsetting gains with business losses can create significant savings. This kind of planning requires a chartered public accountant who understands both investment and small business strategy.

Entity Structure: Time to Consider an S Corp?

If your side hustle is earning more than $75,000 per year, it might be time to form an LLC and elect S Corporation status.

Why?

• As a sole prop, you pay self-employment tax on 100% of your income
  
  
• As an S Corp, you pay self-employment tax only on your salary
  
  
• The rest is taken as distributions, which are not subject to self-employment tax
  
  

That’s thousands in annual tax savings legally.

A CPA in Austin, Texas can help you run the numbers and decide whether making the S Corp election (IRS Form 2553) is your next best move.

What Happens If You Ignore This?

Let’s be blunt.

If you wait until April to start thinking about taxes, you will:

• Miss deductions
  
  
• Overpay
  
  
• Risk filing errors
  
  
• Possibly owe penalties
  
  
• And definitely leave money on the table
  
  

But with the help of a tax advisor Austin business owners trust, you can go from reactive to proactive.

Final Thoughts: Treat Your Side Hustle Like the Business It Is

You’re working hard. You’re bringing in income. And you’re building something that matters. The IRS already sees you as a business owner, it’s time you start acting like one.

That means:

• Tracking your expenses
  
  
• Claiming your deductions
  
  
• Structuring your income
  
  
• Planning ahead
  
  
• And working with a certified public accountant near you who knows how to turn compliance into strategy
  
  

At Insogna CPA, we help entrepreneurs across Austin and beyond:

• Maximize deductions
  
  
• Stay compliant with FBAR filing
  
  
• Navigate IRS Forms 1040, 1040-ES, and 2553
  
  
• Avoid audit risk
  
  
• And keep more of the money they’ve earned
  
  

Ready to stop overpaying and start planning?
 Schedule your consultation today.

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Summary of What This Blog Covers

• Five year-end tax strategies to reduce your taxable income before December 31.
  
  
• How a CPA helps uncover missed deductions and plan smarter.
  
  
• Advanced moves like capital gains timing, HSA use, and FBAR compliance.
  
  
• Why acting before year-end saves more than waiting until tax season.

How to Outmaneuver the IRS (Legally) and Build a Tax Strategy That Works as Hard as You Do

Let’s set the scene. It’s late December. You’ve just wrapped your best quarter yet. Revenue’s up. Team’s growing. Clients are happy. You finally start to exhale.

And then it hits you.

The tax bill.

You open your profit and loss statement, scan last year’s return, and realize that once again, a good chunk of your hard-earned money is about to go somewhere that feels… less than satisfying.

If you’re nodding along, this is for you.

Because here’s the truth: tax planning isn’t about surviving tax season, it’s about seizing opportunities. Especially when the calendar still says “this year.”

At Insogna CPA, a respected CPA firm in Austin, Texas, we’ve helped thousands of business owners turn December into their most profitable month not by selling more, but by planning smarter.

So grab a coffee. Sit down for ten minutes. Here are the five critical year-end tax strategies that can make or break your bottom line and how to execute each one with precision.

1. Contribute to Retirement Accounts: A Legal, Strategic Tax Shield

Let’s start with the obvious but often overlooked move: retirement contributions.

If you’re a business owner, you’re not just eligible for tax-advantaged retirement accounts, you’re encouraged by the IRS to use them. And when used correctly, these accounts are one of the most powerful tax reduction tools available.

Why It Works:

Contributions to a qualified retirement account reduce your taxable income, lowering both your income tax and potentially your self-employment tax.

That means if you make a $30,000 contribution, your IRS Form 1040 shows $30,000 less in income.

Options That Matter for Business Owners:

• Solo 401(k): For solopreneurs or S Corp owners with no employees (except possibly a spouse). You can contribute both as an employee and employer.
  
  
• SEP IRA: A good option for self-employed people with no or few employees. Contribution limit is up to 25% of net income.
  
  
• Traditional IRA: Still valid, especially if you’re covered by a workplace plan but fall within income limits.
  
  

When You Must Act:

• Solo 401(k): Must be set up by December 31, even if funded next year.
  
  
• SEP IRA: Can be opened and funded by the tax filing deadline, including extensions.
  
  
• Traditional IRA: Contributions can typically be made by April 15.
  
  

How Insogna CPA Helps:

As a small business CPA in Austin, we analyze your current earnings, project your year-end tax exposure, and advise on exact contribution limits to minimize your taxes today and secure your retirement tomorrow.

2. Section 179 Deduction: Buy Now, Deduct Now

You know those office upgrades you’ve been putting off? The new camera setup? The desktop you’ve been limping along with since 2019?

This is your chance.

Section 179 of the IRS Tax Code allows you to deduct the full cost of qualifying business equipment the year you place it in service, rather than depreciating it over several years.

What Qualifies:

• Computers, monitors, laptops
  
  
• Business vehicles used over 50% for business
  
  
• Office equipment like desks, printers, filing systems
  
  
• Software, including cloud-based subscriptions
  
  

Example:

You purchase a $10,000 laptop setup on December 20, start using it immediately, and qualify to deduct the full $10,000 from your taxable income this year.

But here’s the catch: it must be in service by December 31.

The Compliance Edge:

Your purchase must meet IRS guidelines especially if you’re claiming a vehicle deduction or splitting business/personal use.

How your Austin tax accountant helps:

We guide you through the eligibility rules, help you document usage properly, and ensure you’re not missing out on full deductions by waiting too long.

3. Run a Year-End Financial Review: Find the Money Before It’s Lost

Tax planning isn’t a mystery. It’s math, timing, and compliance.

And nothing drives clarity like a year-end financial review.

By reviewing your books in December—not in April—you can make strategic decisions about deductions, income deferral, and prepayments that could lower your tax bill by thousands.

What We Look At:

• Have you correctly tracked contractor payments for 1099 reporting?
  
  
• Are you taking full advantage of home office deductions, mileage, software costs, and meals?
  
  
• Have you reviewed deferred income options (delaying billing into next year)?
  
  
• Are you eligible for R&D credits, energy tax incentives, or hiring credits?
  
  

The Audit-Proof Factor:

Year-end planning allows you to clean up misclassified expenses, prepare proper supporting documentation, and align your books with IRS expectations.

How your tax preparer near you helps:

At Insogna CPA, we aren’t just filing your return. We’re running diagnostics, catching blind spots, and delivering year-end recommendations tailored to your industry, entity, and income mix.

4. Prepay Expenses: Time Travel for Tax Savings

Let’s talk about a trick even the IRS agrees with: prepaying next year’s expenses in the current year.

If you use the cash accounting method, the IRS lets you deduct business expenses in the year you pay them even if they’re technically for future services.

What You Can Prepay:

• Rent or lease payments
  
  
• Business insurance
  
  
• Marketing retainers or ad buys
  
  
• Software or licensing renewals
  
  
• Professional services (yes, you can prepay your Austin accounting service)
  
  

Example:

You pay $12,000 upfront in December for next year’s rent. That’s $12,000 off this year’s taxable income even though the space won’t be used until next year.

How your CPA in Austin, Texas helps:

We review your projected Q4 income, recommend how much to prepay based on your cash flow, and verify which prepayments meet IRS rules for cash-basis taxpayers.

5. Work With a CPA Who Actually Builds a Tax Strategy

There’s a huge difference between preparing a tax return and building a tax strategy.

Most business owners get caught in a reactive cycle: file in April, panic in March, forget by May.

But your tax strategy should be just as dynamic and forward-thinking as your business model. And it starts with choosing the right CPA firm in Austin, Texas, not just the nearest tax shop.

What a Great CPA Delivers:

• Entity analysis: Should you be an S Corp? Still a sole prop? What about a multi-member LLC?
  
  
• Payroll planning: Are you paying yourself a reasonable salary or triggering red flags?
  
  
• Deduction strategies: Are you using mileage vs. actual expenses, home office, or employee fringe benefits?
  
  
• FBAR filing: Do you have foreign accounts requiring FinCEN Form 114? We handle that too.
  
  

What you do:

Schedule a year-end review. Bring your questions, fears, and financials.

What we do:

Give you clarity, strategy, and confidence in your tax future.

Bonus: Advanced Moves for Growth-Stage Business Owners

If you’re scaling fast or expanding into new ventures, here’s where the tax code gets interesting.

Capital Gains Tax Planning

Have gains from real estate, investments, or crypto?

• Short term capital gains are taxed at your ordinary rate (up to 37%)
  
  
• Long term capital gains (held 12+ months) are taxed at 0%, 15%, or 20%
  
  

We help you:

• Harvest losses to offset gains
  
  
• Defer income to reduce bracket exposure
  
  
• Strategically time sales for optimal tax impact
  
  

Health Savings Accounts (HSAs)

An HSA is a triple-threat:

• Contributions are tax-deductible
  
  
• Funds grow tax-deferred
  
  
• Withdrawals are tax-free for medical expenses
  
  

FBAR Filing: Get It Done, Get It Right

If your business involves international operations or foreign financial accounts, you may need to file an FBAR (FinCEN Form 114) even if the funds are only temporarily over $10,000.

Miss the deadline? The IRS could slap you with $10,000+ penalties.

As your trusted certified CPA near you, we ensure you comply with all foreign reporting requirements before it becomes a problem.

What Happens If You Wait?

If you delay until January or beyond, you’ll lose out on:

• Contributions to certain retirement plans
  
  
• The ability to prepay expenses
  
  
• Section 179 deductions
  
  
• The chance to time income and reduce tax bracket exposure
  
  
• Time to prepare for FBAR compliance if required
  
  

Don’t let tax season control you. With the right team, the right timeline, and the right strategy, you’ll control the outcome and the savings.

Final Thoughts: You Work Too Hard to Leave Money on the Table

Your income is growing. Your business is maturing. And it’s time your tax strategy did the same.

At Insogna CPA, we bring proactive, professional, precision-guided tax strategy to business owners across Austin and the U.S. Whether you need help with:

• Retirement contributions
  
  
• Capital gains planning
  
  
• FBAR filing
  
  
• S Corp election
  
  
• Payroll optimization
  
  
• Or year-end tax moves
  
  

We’re your chartered public accountant, tax preparer, and strategic advisor—all in one.

Schedule your year-end tax planning consultation today.

You bring the business, we’ll bring the blueprint to save you thousands.

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Summary of What This Blog Covers

• Compares W-2 and 1099 income and their tax impacts.
  
  
• Shares tax-saving strategies for 1099 contractors.
  
  
• Explains how S Corp status can reduce self-employment tax.
  
  
• Highlights key considerations like capital gains and FBAR filing.

You’ve got the clients. You’ve built the systems. Your brand is gaining traction, and the money’s finally coming in. But now that you’re starting to feel the weight of your success, here comes that lingering question: “How should I actually get paid?”

Should you stay on a W-2? Should you stick with 1099 contractor income? Or is it finally time to level up and make the leap into LLC or S Corporation territory?

Here’s the thing most entrepreneurs don’t realize until it’s too late: how you receive your income (W-2, 1099, S Corp salary) drastically impacts your taxes, deductions, retirement savings, and long-term growth. And if you’re not choosing your income structure intentionally, you could be leaving thousands of dollars on the table.

As your trusted CPA in Austin, Texas, let me walk you through this step-by-step: the trade-offs, the tax math, the strategy, and what structure will save you the most money while supporting your lifestyle and business goals.

W-2 vs. 1099: What You Need to Know

First, let’s clear up the basics of these income types.

When you receive a W2 form, most of the heavy lifting is done for you. Your employer has already withheld your taxes, submitted payroll filings, and contributed to your Medicare and Social Security accounts.

But when you’re self-employed and earning 1099 income, you’re treated like both the employer and employee. That means you pay the full 15.3% in self-employment tax, file your own IRS Form 1040, and make quarterly payments using IRS Form 1040-ES.

This difference alone can cost you thousands if you don’t have a strategic plan.

The Real-Life Tax Difference

Let’s say you earn $100,000 per year.

• As a W-2 employee, you pay 65% in FICA taxes. Your employer covers the other half.
  
  
• As a 1099 contractor, you pay the entire 15.3% in self-employment tax—$15,300, before income tax even begins.
  
  

So, you’re starting every year $7,650 behind simply because of how your income is categorized.

Now, here’s the kicker: 1099 income opens the door to far more deductions. Business expenses: software, marketing, professional services like working with your Austin tax accountant can significantly reduce your taxable income.

But that’s only if you have the right systems in place and are backed by a proactive certified public accountant near you who helps you build and manage a solid tax plan.

The Trade-Offs: Freedom vs. Simplicity

For some entrepreneurs, the predictability of a W-2 job is worth it. You receive benefits like health insurance, paid time off, and a retirement plan. You don’t have to think about quarterly payments or track your business deductions.

But for others—especially those looking to build wealth, scale, and have control over their finances—1099 income provides more flexibility and bigger long-term benefits.

That flexibility comes with responsibility. You need to:

• Track income and expenses year-round
  
  
• File quarterly estimated taxes
  
  
• Pay the full self-employment tax
  
  
• Consider a retirement plan or health insurance on your own
  
  

Working with a small business CPA in Austin ensures you don’t miss any of the big deductions or end up with surprises come April.

How to Cut Your Tax Bill as a 1099 Contractor

If you’re self-employed and earning through 1099s, you’re probably paying more than necessary, unless you’re actively managing your deductions and using every tool in the tax code to your advantage.

Start with These Strategies:

1. Deduct Every Legitimate Business Expense
    This includes:
   
   

• Home office
  
  
• Business use of vehicle
  
  
• Cell phone and internet
  
  
• Travel, meals (50% deductible), and lodging
  
  
• Office equipment
  
  
• Subscriptions and software
  
  
• CPA fees (yes, you can deduct your CPA in Austin as a business expense)
  
  

1. Contribute to a Solo 401(k) or SEP IRA
    Depending on your profit and structure, you could contribute up to $66,000 per year pre-tax. That’s a huge reduction to your taxable income and a meaningful boost to your retirement.
   
   
2. Use Section 179 for Equipment Purchases
    If you purchase business-use equipment (camera, laptop, standing desk), you can deduct the full cost in the year you buy it.
   
   
3. Consider Health Savings Accounts (HSAs)
    If you have a high-deductible health plan, you can contribute to an HSA and deduct contributions on your 1040 tax form.
   
   

But here’s where it gets even better: if you’re earning more than $75,000 per year, it might be time to take your tax strategy up a level.

The S Corporation: A Next-Level Tax Strategy for Entrepreneurs

Once your net income consistently exceeds $75,000, switching to an S Corporation structure can be a game-changer.

How It Works:

• You form an LLC and elect S Corp status with the IRS by filing Form 2553.
  
  
• You pay yourself a reasonable salary, which is taxed normally.
  
  
• The remaining profits are taken as distributions, which are not subject to self-employment tax.
  
  

Let’s Do the Math:

That’s over $7,000 in annual tax savings and it gets even better as you grow.

Working with an experienced CPA firm in Austin, Texas ensures you’re setting a reasonable salary, staying compliant with payroll, and filing all forms correctly, including Form 1120-S and Form 941 for quarterly payroll.

What If You Have Both W-2 and 1099 Income?

Many business owners are navigating a hybrid model: working part-time or full-time with a W-2 job while running a side hustle or growing a startup on the side.

If this is you, pay close attention to:

• Adjusting your W-2 withholdings so they don’t overcompensate or underpay
  
  
• Paying quarterly taxes on your 1099 income
  
  
• Keeping business deductions separate
  
  
• Reporting everything accurately on your IRS Form 1040
  
  

This is exactly where a certified accountant or tax consultant near you becomes invaluable. You need a plan that makes the two income types work together, not against you.

Advanced Scenarios: Capital Gains, FBAR, and More

If you’re also investing in stocks, crypto, or real estate—or holding foreign assets—your financial profile is even more complex.

Capital Gains Tax Planning:

• Short-term capital gains (held <1 year) are taxed at your regular rate
  
  
• Long-term capital gains (held >1 year) benefit from lower tax brackets (0%, 15%, or 20%)
  
  
• Pairing gains and losses within a tax year can reduce liability
  
  

Work with a chartered public accountant or taxation accountant to coordinate your business and investment strategies under one tax plan.

FBAR Filing Requirements:

If your foreign accounts exceeded $10,000 in value at any point during the year even briefly, you may need to file an FBAR (FinCEN Form 114).

This includes:

• Foreign bank accounts
  
  
• Foreign-held PayPal or Stripe balances
  
  
• Offshore crypto wallets
  
  

Noncompliance can result in penalties of $10,000 or more. A CPA office near you with FBAR filing expertise ensures you stay compliant and protected.

Is W-2 or 1099 Better for You?

Choose W-2 If:

• You want a simple financial life with minimal tax management
  
  
• You value employer-sponsored benefits like insurance and 401(k)s
  
  
• You’re not interested in managing quarterly taxes or deductions
  
  

Choose 1099 If:

• You want full control of your income and work schedule
  
  
• You’re comfortable managing expenses and tax payments
  
  
• You want access to a wide range of deductions
  
  

Consider S Corp If:

• You earn $75,000 or more in profit
  
  
• You want to minimize self-employment tax
  
  
• You’re ready to run payroll (or hire a licensed CPA to do it for you)
  
  

Still not sure? A quick consult with a certified CPA near you will clear it up in 30 minutes or less.

Final Takeaway: Your Income Type Is a Financial Lever

This isn’t just about compliance or tax forms. It’s about building a strategy that supports your goals.

Whether you’re freelancing full-time, running a growing business, or balancing W-2 and 1099 income, the right structure will help you:

• Keep more of your income
  
  
• Reduce your stress at tax time
  
  
• Plan smarter for the future
  
  

At Insogna CPA, we help business owners and self-employed professionals across Austin and beyond:

• Optimize W-2, 1099, and S Corp income
  
  
• Handle FBAR filing, quarterly payments, retirement contributions, and capital gains strategy
  
  
• File all tax forms correctly from IRS Form 1040 and 1040-ES to Form 2553 and Form 1120-S
  
  

If you’re ready to stop overpaying, start planning, and put your income to work for you, let’s talk.

Schedule a consultation today with your trusted Austin tax accountant at Insogna CPA. Let’s get your income aligned with your goals and build a smarter, stronger financial foundation.

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Summary of What This Blog Covers

• Why sole proprietors often overpay in self-employment taxes.
  
  
• How an S Corp structure can reduce your tax burden.
  
  
• Steps to switch from sole prop to S Corp, including payroll and filings.
  
  
• Additional tax strategies like deductions, retirement planning, and FBAR compliance.

How the Right Business Structure Could Save You Thousands

Let’s get one thing straight right now. Being successful in business isn’t just about making more money. It’s about keeping more of it.

And if you’re running your business as a sole proprietor or even a single-member LLC without a strategic tax structure, there’s a good chance you’re paying more in taxes than necessary. Not because you made a mistake. But because no one told you what’s possible and what’s costing you.

At Insogna CPA, a trusted CPA firm in Austin, Texas, we help entrepreneurs rethink the way they earn, pay, and structure their income. Why? Because with just one key shift like electing S Corporation (S Corp) status, you could potentially save thousands in taxes every year.

Let’s dive into why so many business owners overpay, and what you can do today to change that story.

Why So Many Business Owners Overpay

If you’re a sole proprietor, you’re filing your business taxes as part of your personal return—IRS Form 1040, specifically on Schedule C. That’s straightforward. It’s how most people start.

But simple doesn’t always mean smart. And it rarely means tax-efficient.

Here’s why:

You Pay 15.3% Self-Employment Tax

That tax covers Social Security and Medicare contributions. Unlike a W-2 employee, whose employer picks up half of that tab, you’re the boss so you pay both the employer and employee portions.

• 4% Social Security
  
  
• 9% Medicare
  
  
• Total: 3%
  
  

Let’s put that in numbers.

If you earn $100,000 in net profit, you owe:

• $15,300 in self-employment tax
  
  
• Another ~$18,000 in federal income tax (depending on deductions and filing status)
  
  

That’s $33,000 gone before you touch a single dime.

And here’s what makes it worse. You’re taxed on 100% of your profit, whether you take it out of the business or not.

The Power of Choosing the Right Business Structure

What if you didn’t have to pay that full 15.3% on every dollar?

That’s where a properly structured S Corporation comes in.

Most business owners start as sole proprietors or single-member LLCs because they’re fast and cheap to set up. But the real tax savings come when you know how and when to pivot.

When your income grows, your structure should evolve too.

What Is an S Corporation?

An S Corporation isn’t a separate entity. It’s a tax election, a way for the IRS to treat your business differently for tax purposes.

You can start as an LLC, then file IRS Form 2553 to elect S Corp status.

And here’s the key benefit: income splitting.

With an S Corp, your business profits can be split between:

1. A reasonable salary (subject to payroll tax)
   
   
2. Distributions (not subject to self-employment tax)
   
   

That difference can dramatically reduce what you owe.

S Corp vs. Sole Proprietor: A Side-by-Side Look

That’s more than $7,000 in savings every year, and the more you earn, the more you save.

Is an S Corporation Right for You?

Making the switch isn’t just about saving money. It’s about timing, structure, and your goals.

An S Corp Might Be Right If:

• Your business consistently earns $75,000 or more in net income
  
  
• You’re comfortable running (or outsourcing) payroll
  
  
• You’re ready to grow and want your structure to scale with you
  
  
• You want to reduce your tax bill without cutting corners
  
  

An S Corp Might Not Be Right If:

• You’re earning less than $50,000
  
  
• You need to retain all profits in the business (S Corps must distribute profits)
  
  
• You’re not ready to handle quarterly compliance (we can handle this for you, by the way)
  
  

Consulting with a licensed CPA or tax advisor in Austin will help you decide if this move makes sense based on your unique financial landscape.

Common Misconceptions About S Corps

Let’s bust a few myths.

“Isn’t it a hassle to become an S Corp?”

Not with the right team. Your Austin, TX accountant can file IRS Form 2553, help set up payroll, and handle quarterly and year-end filings.

“Won’t I lose flexibility?”

No, you gain control. You still run your business as you always have, but now you do it with a tax structure designed to help you grow.

“Can’t I just do this myself?”

Technically, yes. But DIYing your payroll filings, Form 1120-S, and quarterly tax payments is risky. One mistake with Form 941 or W-2 compliance could trigger penalties. A certified public accountant near you can help you avoid that.

How to Transition from Sole Prop to S Corp

We walk clients through this transition every week. Here’s how it works:

Step 1: Form an LLC (If You Haven’t Already)

You need an LLC to elect S Corp status. If you don’t have one, we’ll set it up for you, ensuring you’re compliant with state regulations.

Step 2: File IRS Form 2553

We submit your S Corp election on time, correctly. If you miss the deadline, you could lose out on a year’s worth of savings.

Step 3: Set Up Payroll

This includes:

• Determining a reasonable salary based on IRS guidelines
  
  
• Setting up payroll software or outsourcing to our firm
  
  
• Filing quarterly reports (Form 941)
  
  
• Issuing a W-2 to yourself at year-end
  
  

Step 4: File Your S Corp Return (Form 1120-S)

Along with your personal 1040, we file your S Corp tax return and ensure everything ties together smoothly.

Working with an experienced CPA in Austin, Texas or certified accountant near you makes the whole process seamless.

Extra Credit: Other Tax Strategies to Layer In

1. Maximize Your Deductions

Standard deductions include:

• Home office
  
  
• Business software
  
  
• Professional development
  
  
• Subscriptions
  
  
• Equipment (write off with Section 179)
  
  
• Health insurance (if self-employed)
  
  
• CPA fees (yes, your CPA office near you is deductible)
  
  

2. Open a Solo 401(k) or SEP IRA

You could:

• Contribute up to $66,000 per year (Solo 401k)
  
  
• Reduce your taxable income now
  
  
• Build tax-deferred retirement savings
  
  

Your small business CPA in Austin will help calculate the right contribution amounts and file associated forms.

3. Use a Health Savings Account (HSA)

If you have a high-deductible health plan, contribute to an HSA. It reduces your taxable income and allows tax-free withdrawals for medical expenses.

Special Situations: W-2 and 1099 Hybrid Income

What if you have both W-2 and 1099 income?

• Many professionals earn a salary during the day and consult or freelance at night
  
  
• In this case, your W-2 covers your payroll taxes
  
  
• But your 1099 income requires quarterly payments via IRS Form 1040-ES
  
  

You can still deduct business expenses related to your side hustle, but they need to be tracked separately. A seasoned tax preparer near you can make sure nothing gets missed.

Capital Gains, Investments, and Advanced Planning

Capital Gains Strategy:

• Short-term capital gains tax is applied to assets sold in under a year
  
  
• Long-term capital gains tax is applied to assets held longer than one year
  
  
• Rates for long-term gains are significantly lower, sometimes even 0% depending on income
  
  

Your chartered professional accountant or taxation accountant can help you optimize how and when to realize these gains, especially when paired with a growing business income.

International Considerations: FBAR Filing

Have more than $10,000 across foreign accounts at any point in the year? You’re required to file an FBAR (FinCEN Form 114).

This includes:

• Foreign bank accounts
  
  
• International PayPal balances
  
  
• Offshore crypto wallets
  
  
• Brokerage accounts
  
  

Noncompliance can lead to penalties of $10,000 or more, even if you didn’t owe taxes. If this applies to you, our enrolled agent or certified general accountant can guide you through FBAR filing requirements.

Working With the Right CPA

At Insogna CPA, our team includes:

• Licensed CPAs
  
  
• Certified public accountants
  
  
• Enrolled agents
  
  
• Tax professionals trained in capital gains, S Corp strategy, 1040 tax form compliance, and more
  
  

We offer:

• Entity review and structuring
  
  
• Full-service S Corp compliance
  
  
• Payroll setup and administration
  
  
• Quarterly estimated payment management
  
  
• Advanced tax planning for investments, retirement, and growth
  
  

If you’ve been typing “tax services near me” or “CPA firms near me” hoping to find a team that will actually take the time to get to know your business, this is where your search ends.

Final Takeaway: Pay Less. Keep More. Grow Smarter.

If your business is generating profit and especially if you’re passing $75,000 a year, it’s time to stop guessing and start structuring your income.

You don’t need to fight the IRS. You just need to work with the tax code instead of against it.

At Insogna CPA, we help business owners:

• Save thousands with proper S Corp setup
  
  
• File all required forms (from Form 2553 to Form 1120-S)
  
  
• Track deductions and plan retirement
  
  
• Navigate FBAR filings and capital gains tax
  
  
• Reduce tax stress, year-round
  
  

You work too hard to leave money on the table.

Let’s fix that. Schedule your consultation today.

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Are You Paying More in Taxes Than You Should?

You built your business to have more freedom, more control, and more earning potential. But when tax season rolls around, does it feel like you’re handing too much of that hard-earned money to the IRS?

Here’s the thing: How you structure your income—whether as a W-2 employee, 1099 contractor, or an LLC with an S Corp election—directly impacts how much you pay in taxes.

If you’re:

• Paying a painful amount in self-employment taxes as a 1099 contractor
• Unsure if you should form an LLC or elect S Corp status
• Frustrated that other business owners seem to owe less at tax time

Then it’s time to take a closer look at how your income structure affects your bottom line. A few smart decisions now can mean thousands in tax savings every year.

Why This Happens: The Tax Difference Between W-2, 1099, and S Corp Income

When it comes to taxes, not all income is created equal. If you’re self-employed or running your own business, you need to know the key differences between W-2 wages, 1099 contractor income, and S Corp distributions.

Breaking Down the Tax Impact

If you’re earning 1099 income as a sole proprietor, you’re paying both the employer and employee share of Social Security and Medicare taxes—a total of 15.3% in self-employment tax, on top of your regular income tax. This adds up quickly.

For high-earning freelancers and consultants, switching to an LLC with an S Corp election can significantly reduce self-employment taxes and increase take-home income.

The Solution: Structuring Your Income for Maximum Tax Efficiency

If you’re a consultant, freelancer, or independent contractor, the best way to minimize taxes is to structure your income strategically. Here’s how:

1. Should You Stay a Sole Proprietor or Form an LLC?

If you’re just starting out and making under $50,000 annually, staying a sole proprietor might make sense for simplicity. However, as your income grows, an LLC provides liability protection and tax benefits.

✔ Who should consider forming an LLC?

• Freelancers earning over $50,000 annually
• Independent consultants working with multiple clients
• Business owners looking for legal protection

✔ What an LLC does for you:

• Separates business and personal assets for liability protection.
• Opens the door for S Corp election, which can reduce self-employment taxes.

2. When an S Corp Election Makes Sense

Once your income hits $75,000–$100,000 or more, switching from a sole proprietorship to an LLC with an S Corp election can result in major tax savings.

How an S Corp saves you money:
 ✔ You pay yourself a reasonable salary (subject to payroll taxes).
 ✔ Any remaining profits are taken as distributions, which are NOT subject to self-employment tax.
 ✔ You still deduct business expenses like a sole proprietor, but with added tax advantages.

Example:

• A sole proprietor earning $120,000 pays 3% self-employment tax on the full amount ($18,360 in taxes).
• An S Corp owner pays themselves a $60,000 salary and takes the remaining $60,000 as distributions. Self-employment tax only applies to the salary portion, cutting taxes significantly.

A tax advisor in Austin can help you determine the right salary and profit split to maximize savings without raising red flags with the IRS.

3. Optimize Tax Planning Year-Round

Structuring your income is just one part of the equation. To truly minimize taxes, you need a comprehensive tax strategy that includes:

 ✔ Quarterly estimated tax payments – Avoid IRS penalties and keep cash flow steady.
 ✔ Maximizing deductions – Business expenses, home office, retirement contributions, and health insurance can all lower taxable income.
 ✔ Retirement planning – A Solo 401(k) or SEP IRA can reduce taxable income while helping you build wealth.
 ✔ Tracking income and expenses properly – Using accounting software like QuickBooks and working with an Austin, TX accountant ensures compliance and maximizes deductions.

A small business CPA in Austin will make sure your LLC, S Corp election, and tax strategy are fully optimized for long-term savings.

Is It Time to Change Your Income Structure? Let’s Find Out.

If you’re still operating as a sole proprietor or filing taxes as a 1099 contractor, you could be paying thousands more in taxes than necessary.

At Insogna CPA, we help business owners in Austin, Texas, and beyond determine the best income structure for maximum tax savings. Whether you need help setting up an LLC, electing S Corp status, or creating a tax strategy that actually works, we’re here to help.

Let’s find the best structure for your business. Schedule a free consultation today.

..

Are You Paying More in Taxes Than You Should?

You built your business to have more freedom, more control, and more earning potential. But when tax season rolls around, does it feel like you’re handing too much of that hard-earned money to the IRS?

Here’s the thing: How you structure your income—whether as a W-2 employee, 1099 contractor, or an LLC with an S Corp election—directly impacts how much you pay in taxes.

If you’re:

• Paying a painful amount in self-employment taxes as a 1099 contractor
• Unsure if you should form an LLC or elect S Corp status
• Frustrated that other business owners seem to owe less at tax time

Then it’s time to take a closer look at how your income structure affects your bottom line. A few smart decisions now can mean thousands in tax savings every year.

Why This Happens: The Tax Difference Between W-2, 1099, and S Corp Income

When it comes to taxes, not all income is created equal. If you’re self-employed or running your own business, you need to know the key differences between W-2 wages, 1099 contractor income, and S Corp distributions.

Breaking Down the Tax Impact

If you’re earning 1099 income as a sole proprietor, you’re paying both the employer and employee share of Social Security and Medicare taxes—a total of 15.3% in self-employment tax, on top of your regular income tax. This adds up quickly.

For high-earning freelancers and consultants, switching to an LLC with an S Corp election can significantly reduce self-employment taxes and increase take-home income.

The Solution: Structuring Your Income for Maximum Tax Efficiency

If you’re a consultant, freelancer, or independent contractor, the best way to minimize taxes is to structure your income strategically. Here’s how:

1. Should You Stay a Sole Proprietor or Form an LLC?

If you’re just starting out and making under $50,000 annually, staying a sole proprietor might make sense for simplicity. However, as your income grows, an LLC provides liability protection and tax benefits.

✔ Who should consider forming an LLC?

• Freelancers earning over $50,000 annually
• Independent consultants working with multiple clients
• Business owners looking for legal protection

✔ What an LLC does for you:

• Separates business and personal assets for liability protection.
• Opens the door for S Corp election, which can reduce self-employment taxes.

2. When an S Corp Election Makes Sense

Once your income hits $75,000–$100,000 or more, switching from a sole proprietorship to an LLC with an S Corp election can result in major tax savings.

How an S Corp saves you money:
 ✔ You pay yourself a reasonable salary (subject to payroll taxes).
 ✔ Any remaining profits are taken as distributions, which are NOT subject to self-employment tax.
 ✔ You still deduct business expenses like a sole proprietor, but with added tax advantages.

Example:

• A sole proprietor earning $120,000 pays 3% self-employment tax on the full amount ($18,360 in taxes).
• An S Corp owner pays themselves a $60,000 salary and takes the remaining $60,000 as distributions. Self-employment tax only applies to the salary portion, cutting taxes significantly.

A tax advisor in Austin can help you determine the right salary and profit split to maximize savings without raising red flags with the IRS.

3. Optimize Tax Planning Year-Round

Structuring your income is just one part of the equation. To truly minimize taxes, you need a comprehensive tax strategy that includes:

 ✔ Quarterly estimated tax payments – Avoid IRS penalties and keep cash flow steady.
 ✔ Maximizing deductions – Business expenses, home office, retirement contributions, and health insurance can all lower taxable income.
 ✔ Retirement planning – A Solo 401(k) or SEP IRA can reduce taxable income while helping you build wealth.
 ✔ Tracking income and expenses properly – Using accounting software like QuickBooks and working with an Austin, TX accountant ensures compliance and maximizes deductions.

A small business CPA in Austin will make sure your LLC, S Corp election, and tax strategy are fully optimized for long-term savings.

Is It Time to Change Your Income Structure? Let’s Find Out.

If you’re still operating as a sole proprietor or filing taxes as a 1099 contractor, you could be paying thousands more in taxes than necessary.

At Insogna CPA, we help business owners in Austin, Texas, and beyond determine the best income structure for maximum tax savings. Whether you need help setting up an LLC, electing S Corp status, or creating a tax strategy that actually works, we’re here to help.

Let’s find the best structure for your business. Schedule a free consultation today.

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