Business CPA

Year-end tax planning isn’t just about checking a box. It’s about keeping more of your hard-earned money. If you’re running a business, the right tax moves before December 31 can mean thousands in savings and a smoother tax season ahead.

The question is: Are you making the most of your opportunities?

If you’re tired of scrambling in April, wondering if you missed deductions or could have lowered your tax bill, this guide is for you. Here are seven tax-smart strategies to put into action before the year closes. And if you want expert help, an Austin, Texas CPA can ensure you don’t leave money on the table.

1. Make Smart Business Purchases Now

Thinking about upgrading your office, investing in new equipment, or stocking up on supplies? Now’s the time to buy. Any business-related expenses made before December 31 can lower your taxable income.

What qualifies?

• Tech and software upgrades
• Office furniture and equipment
• Marketing and advertising expenses
• Business-related travel and client gifts

And here’s a bonus: Certain purchases may qualify for Section 179 depreciation, letting you deduct the full cost immediately. If you’re making a big purchase, let’s make sure you’re getting every tax break possible.

A small business CPA in Austin can help you decide what to buy and what to write off before year-end.

2. Set Up a Retirement Plan And Lower Your Tax Bill

No one regrets saving for retirement especially when it means paying less in taxes right now. If you don’t already have a retirement plan in place, setting one up before year-end can give you significant tax advantages.

Options for business owners:

• Solo 401(k): Great for high earners with no employees.
• SEP IRA: A flexible option for those who want to contribute a percentage of their income.
• SIMPLE IRA: Perfect for small businesses with employees.

The best part? Contributions reduce your taxable income, so you’re saving for the future and lowering your tax bill. If you’re unsure which plan fits best, a CPA in Austin, Texas can break it down for you.

3. Review Your Financials and Build a Tax Strategy for Next Year

Too many business owners wait until tax season to review their numbers only to realize they could have saved more with better planning. A mid-year checkup is great, but a year-end review is non-negotiable.

Here’s what you should be looking at:

• Have you hit your revenue and expense targets?
• Are your quarterly tax payments accurate, or will you owe more than expected?
• Is your business structure still the best for tax efficiency?

These aren’t questions to guess at. A tax advisor in Austin can help you take control of your finances before the new year starts.

4. Consider Charitable Donations for a Win-Win

Donating to charity isn’t just a good thing to do; it’s also a smart tax move. If you’ve had a strong revenue year, strategic giving can lower your taxable income and make a positive impact.

How to maximize your deduction:

• Donate cash, inventory, or even appreciated stocks (which can help you avoid capital gains taxes).
• Choose a 501(c)(3) nonprofit to ensure your donation qualifies.
• Keep detailed records because the IRS will

Not sure if your donation qualifies? A CPA firm in Austin, Texas can make sure your generosity pays off.

5. Use Depreciation Write-Offs to Your Advantage

If your business bought equipment, vehicles, or office furniture this year, you might qualify for accelerated depreciation. Instead of deducting small amounts over several years, you could deduct the full cost now under Section 179 or Bonus Depreciation.

Why does this matter? Because cash flow is king. Taking a full deduction now reduces your taxable income today—meaning more money stays in your business.

Not sure if your recent purchases qualify? An Austin accounting firm can help you get every deduction you deserve.

6. Take Advantage of Tax Credits (Not Just Deductions)

Tax deductions reduce your taxable income, but tax credits reduce the actual taxes you owe—dollar for dollar. And too many business owners overlook them.

Some of the most valuable tax credits for business owners include:

• R&D Tax Credit: If you’ve invested in innovation, product development, or process improvements.
• Work Opportunity Tax Credit: If you’ve hired employees from certain target groups.
• Energy-Efficient Business Credit: If you’ve made eco-friendly upgrades to your business.

If you’re in an industry that qualifies for tax credits, you shouldn’t be paying a dime more than necessary. A tax advisor in Austin can help you claim every credit available to you.

7. Schedule a Tax Strategy Session with Insogna CPA

There’s a difference between filing taxes and planning for taxes. If you’re only thinking about your taxes once a year, you’re likely paying too much.

Here’s what a year-end tax strategy session can do for you:
 ✔ Identify deductions you haven’t thought about.
 ✔ Ensure you’re making the right moves before December 31.
 ✔ Optimize your business structure for maximum tax efficiency.
 ✔ Give you a clear tax plan for the year ahead so you’re not scrambling at the last minute.

When you work with an Austin accounting service, you’re not just filing a return. You’re taking control of your financial future.

Final Thoughts

Smart business owners don’t wait until April to think about taxes. They plan ahead. By making the right moves before year-end, you can lower your tax burden, protect your profits, and set yourself up for success in the new year.

Why pay more than you have to?

Book a consultation today with Insogna CPA—your trusted Austin TX accountant.

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The Problem: Every Year, Tax Season Feels Like a Fire Drill

You know the drill. April rolls around, and suddenly, you’re drowning in receipts, scrambling to track expenses, and praying you don’t owe more than expected. Maybe you missed some deductions. Maybe you forgot about those pesky quarterly tax payments. Either way, tax season always seems to show up faster than you’re ready for it.

Sound familiar? You’re not alone. Many entrepreneurs feel the same way like they’re constantly playing catch-up with the IRS instead of staying ahead. The truth is, tax season isn’t the problem. The lack of a system is. And that’s where the right Austin, Texas CPA can make all the difference.

Why Do Tax Deadlines Always Sneak Up?

If tax time feels like a mad scramble every year, there’s usually a good reason. Here’s what’s likely tripping you up:

• You’re too busy running your business to track every deductible expense.
• You’re not keeping up with quarterly estimated tax payments, leading to a surprise bill in April.
• Your bookkeeping system is outdated or nonexistent, so finding the right numbers feels like a scavenger hunt.
• You don’t have a tax strategy in place, meaning you’re probably overpaying without realizing it.

The good news? It doesn’t have to be this way. With the right system (and a solid CPA in Austin, Texas to guide you), tax time can actually be… dare we say, painless?

The Solution: A Proactive Tax System That Works for You

The key to stress-free tax season? Stop treating it like a one-time event. When you get organized year-round, tax deadlines stop feeling like an emergency and start feeling like just another day. Here’s how:

1. Get Your Books in Order—For Real This Time

Trying to organize a year’s worth of finances in a few weeks? That’s like cramming for a final exam the night before. It never ends well. Instead, keep things clean and simple all year long:

• Use QuickBooks Online or Xero to track transactions automatically.
• Separate business and personal expenses (yes, even that “business lunch” you charged on your personal card).
• Snap and store receipts with Dext or Expensify. No more shoeboxes full of paper.

Need help setting this up? A small business CPA in Austin can make sure you’re using the right tools and processes to eliminate year-end chaos.

2. Stay on Top of Quarterly Tax Payments

If you’re self-employed or own a business, the IRS expects you to pay taxes four times a year, not just in April. Missing these payments can lead to penalties and an ugly surprise when you finally file.

• Know Your Deadlines – Quarterly tax payments are due in April, June, September, and January.
• Calculate Your Payments Correctly – Work with an Austin tax accountant to estimate what you owe (so you’re not overpaying or underpaying).
• Automate It – Set up direct payments through the IRS’s EFTPS system so you never forget.

When you’re working with a CPA firm in Austin, Texas, they’ll make sure your estimated payments are on point—no guesswork, no penalties, just smooth sailing.

3. Track Deductions Like a Pro (So You Keep More Money)

Waiting until April to figure out your deductions? That’s how you miss opportunities and end up paying way more than you should. Instead, track deductible expenses as they happen:

What Can You Deduct?

• Home office expenses (if you actually work from home, not just binge Netflix there).
• Business travel, meals, and client entertainment.
• Software subscriptions, marketing expenses, and professional services.
• Health insurance premiums (for self-employed business owners).
• Retirement contributions (Solo 401(k), SEP IRA, etc.).

How to Keep Track:

• Use accounting software to categorize transactions automatically.
• Keep digital records of receipts so you never miss a deduction.
• Review financials quarterly with a tax advisor in Austin to find more savings.

4. Stop Thinking About Taxes Once a Year

The biggest tax mistake entrepreneurs make? Only thinking about taxes in April. A great Austin accounting firm does way more than file your return. They help you plan ahead, so you actually pay less.

• Quarterly Check-Ins – A CPA in Austin, Texas will review your income, expenses, and estimated payments to make sure you’re on track.
• Tax Strategy Sessions – Find out if restructuring your business (LLC vs. S-Corp) could save you thousands.
• End-of-Year Planning – Maximize last-minute deductions before the year closes.

Let’s Put an End to Tax-Time Chaos

Here’s the truth: Tax stress isn’t about the deadline. It’s about the lack of a system. When your books are organized, your deductions are tracked, and your tax payments are made on time, tax season stops feeling like a nightmare.

And the best part? You don’t have to figure this out alone.

Tired of Tax-Time Chaos? Let Insogna CPA Handle It.

You have enough on your plate. Don’t let tax stress be part of it. Whether you need help with quarterly tax planning, bookkeeping automation, or a full tax strategy, Insogna CPA, a top-rated Austin CPA firm, is here to help.

Book a consultation today and let’s build a tax plan that works for you—not against you.

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so you’re ready when the time comes.

How We Help at Insogna CPA

We don’t just file your return. We structure your business for tax efficiency, clarity, and long-term growth.

Our Services Include:

✔ Full S Corporation evaluation and tax savings analysis
 ✔ Form 2553 filing and IRS confirmation tracking
 ✔ Setup of W-2 payroll, Form 1120-S, and all compliance forms
 ✔ FBAR filing for international business accounts
 ✔ Strategic tax planning throughout the year
 ✔ Personalized guidance from a certified public accountant near you

Whether you’re based in Austin or searching for the best CPA office near you, we provide tax preparation services near you with clarity, consistency, and confidence.

What You Won’t Get with DIY Tax Software

We’re not knocking tools like TurboTax Online, H&R Block, or Liberty Tax. They’re great for simple W-2 filers.

But S Corps? That’s not their strong suit.

These tools can’t:

• Calculate a reasonable salary based on IRS standards
  
  
• File Form 2553 properly for your state
  
  
• Coordinate multi-entity income and contractor payments
  
  
• Spot and resolve FBAR filing issues
  
  

For that, you need a human expert, a tax accountant near you who actually understands your business model.

Final Thoughts: Structure Isn’t Just a Form, It’s a Strategy

If you’re earning more, growing faster, and looking for ways to build wealth, not just pay bills, your tax structure needs to evolve.

An S Corporation can absolutely save you thousands in taxes each year but only when:

• Your profit supports it
  
  
• Your payroll is compliant
  
  
• Your CPA is on top of it all
  
  

At Insogna CPA, we’re proud to be a small business CPA in Austin that goes beyond basic filing. We bring strategy, structure, and a smile every step of the way.

Book Your S Corp Tax Strategy Session Today

If you’ve been asking yourself:

• “Am I paying too much in taxes?”
  
  
• “Should I be an S Corp?”
  
  
• “Is my CPA giving me proactive advice?”
  
  

…then it’s time to find out.

Schedule your consultation with Insogna CPA, your trusted Austin, TX accountant, and let’s build a tax strategy that’s tailored to your business and built for your future.

Because you’ve worked too hard to overpay the IRS.

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Summary of What This Blog Covers:

• Unpacks six powerful but underused tax deductions for entrepreneurs
  Breaks down how to legally claim overlooked write-offs like the home office deduction, business mileage, startup costs, and Section 179 to significantly reduce your tax bill.
  
  
• Explains key strategies like the Augusta Rule and QBID with actionable guidance
  Offers real-world insight on how to properly structure and document deductions like renting your home to your business or leveraging the Qualified Business Income Deduction.
  
  
• Covers what happens when these deductions are missed or misapplied
  Details the costly consequences of poor tracking, incomplete documentation, and tax planning gaps and how a certified public accountant can fix them.
  
  
• Shows how Insogna CPA provides expert tax strategy, not just tax prep
  Highlights how our Austin-based CPA firm helps entrepreneurs uncover savings, stay compliant, and create year-round strategies that keep more profit in their business.

You’re hustling, scaling, reinvesting, and building something that matters. The last thing you want? Overpaying taxes because you didn’t know what you could legally deduct.

Let’s call it what it is: the IRS doesn’t reward ignorance, and unfortunately, the most valuable tax breaks aren’t always obvious. They’re buried in code, loaded with fine print, and easy to miss if you don’t have a strategy.

At Insogna CPA, a full-service Austin Texas CPA firm, we specialize in helping entrepreneurs keep more of what they earn. Not just by filing taxes, but by guiding smart decisions all year long.

These six overlooked deductions could put thousands back in your pocket this year. Here’s how to identify, qualify for, and maximize each of them.

1. The Home Office Deduction: Modern and Misunderstood

Yes, you can write off that beautifully efficient corner of your home where you answer emails, lead Zoom calls, and run your business empire.

But here’s where most business owners get it wrong:

• They think it’ll raise audit flags (not true when done properly)
  
  
• They don’t know how to calculate it
  
  
• Or they simply forget about it during tax prep
  
  

Two ways to calculate:

• Simplified Method: $5 per square foot, up to 300 square feet = up to $1,500
  
  
• Actual Expense Method: Deduct a percentage of your actual home expenses including mortgage interest, rent, utilities, repairs, and insurance
  
  

Key requirements:

• The space must be exclusively used for business
  
  
• It must be used regularly
  
  
• It must be your principal place of business
  
  

A CPA near you, preferably a certified public accountant in Austin, can help determine the method that saves you the most based on your space, lifestyle, and income.

2. Business Vehicle Use and Mileage But Only If You Track It

Using your personal vehicle for business whether it’s for client meetings, picking up supplies, or heading to an event? Good news: the IRS lets you deduct those miles or vehicle expenses. But (and it’s a big but), you have to keep solid records.

In 2025, you have two deduction methods to choose from:

Standard Mileage Rate (2025)

• 70 cents per mile (updated for 2025)
  
  
• Includes fuel, maintenance, depreciation, insurance, everything is built into that flat rate
  
  
• Simple, efficient, and great if you don’t want to track every receipt
  
  

Actual Expense Method

• Track actual costs: gas, repairs, insurance, registration, depreciation
  
  
• Multiply total vehicle expenses by the percentage you used the car for business
  
  
• Typically better for newer vehicles or if you have higher maintenance and fuel costs
  
  

To qualify, the IRS expects accurate, consistent logs, not your best guess.
 Use apps like MileIQ, Everlance, or QuickBooks Self-Employed to automate tracking and keep a compliant logbook.

Not sure which method will give you the bigger deduction? A small business CPA in Austin (like us) can calculate both and help you choose the one that saves you more in taxes.

3. Section 179 and Bonus Depreciation (2025): Immediate Write-Offs for Equipment

Still think depreciation means writing off a few hundred bucks a year over a decade? That’s old news.

In 2025, Section 179 and Bonus Depreciation allow you to deduct a significant portion or even the full cost of qualifying business equipment in the year it’s placed in service. These are powerful tax tools for growing businesses investing in vehicles, machinery, or technology.

Section 179 Deduction (2025 limits):

• Deduct up to $1.22 million of qualifying business purchases
  
  
• Applies to vehicles, computers, office furniture, software, and machinery
  
  
• Asset must be purchased and in use by December 31, 2025
  
  
• You must have taxable business income—this deduction can’t create a loss
  
  

Bonus Depreciation (2025):

• Allows you to deduct 60% of the asset’s cost in year one
  
  
• Can be used even if you’re running at a loss
  
  
• Applies to new and used qualified property
  
  
• No dollar limit on the total assets you can depreciate
  
  

Bonus depreciation is currently phasing down under the Tax Cuts and Jobs Act—80% in 2023, 60% in 2025, and potentially lower in future years (unless legislation changes).

Used together, Section 179 and Bonus Depreciation can significantly reduce your 2025 tax bill if you’re investing in growth.

Need help navigating which assets qualify and how to report them? A licensed CPA in Austin, Texas (like us) can walk you through the IRS rules, handle proper classifications, and make sure you document everything to stay audit-proof.

4. The Augusta Rule: Yes, You Can Rent Your Home to Your Business

It’s obscure. It’s niche. And it’s incredibly effective when done right.

The Augusta Rule (IRS Section 280A(g)) allows you to:

• Rent your home to your business for meetings, retreats, or events
  
  
• The business deducts the rent as an expense
  
  
• You, the homeowner, receive the income tax-free, up to 14 days per year
  
  

Let’s say your home rents for $600/day. Four quarterly board meetings = $2,400 tax-free income to you, and a deduction for your business.

Rules to follow:

• You must document the meeting purpose and attendees
  
  
• Charge fair market rent (based on local short-term rental comps)
  
  
• Invoice yourself and document payments
  
  

Work with a certified CPA near you to structure this properly and ensure it withstands scrutiny. When handled right, this is a completely legal tax strategy, not a loophole.

5. QBID: The Qualified Business Income Deduction (Still Powerful in 2025 If You Qualify)

The Qualified Business Income Deduction (QBID) remains one of the most valuable tax-saving opportunities available to small business owners in 2025. But let’s be honest, it’s also one of the most misunderstood.

If you’re a sole proprietor, S Corporation owner, or partner in a pass-through entity, you may be eligible to deduct up to 20% of your qualified business income right off the top of your taxable income.

But here’s the catch: eligibility depends on your income, your industry, and how your business is structured.

2025 Income Thresholds:

• $200,000 for single filers
  
  
• $400,000 for married filing jointly
  
  

If your income is below these thresholds, you likely qualify for the full 20% deduction.

If your income is above those limits, the IRS applies restrictions based on:

• Whether your business is a Specified Service Trade or Business (SSTB) (think law, accounting, consulting, health, and financial services)
  
  
• How much your business pays in W-2 wages
  
  
• The unadjusted basis in qualified property (UBIA) held by the business
  
  

Translation: The closer you get to or cross the income threshold, the more complicated the math becomes.

6. Start-Up and Pre-Launch Costs, Claim Before You Sell a Thing

Launched a business this year? You might be sitting on thousands in deductible expenses before you even opened your doors.

The IRS allows you to deduct certain start-up costs and organizational costs, including:

• Branding, logos, and early marketing
  
  
• Market research and competitor analysis
  
  
• Legal, licensing, or incorporation fees
  
  
• Travel expenses related to business setup
  
  
• Software or tools purchased pre-launch
  
  

You can deduct:

• Up to $5,000 in startup costs
  
  
• Up to $5,000 in organizational costs
  
  
• The rest can be amortized over 15 years
  
  

Keep detailed records, and work with a tax professional near you to categorize these correctly. You can only claim these in your first year of active business so don’t miss it.

Bonus Strategy: Retirement Contributions for Small Business Owners (And the Tax Savings That Come With Them)

Let’s be honest: saving for retirement sounds like one of those things you’ll get to “someday.” But if you’re a business owner in 2025, “someday” should start today because retirement contributions are one of the most underused tax-saving tools available to entrepreneurs.

They don’t just help you build long-term wealth, they also slash your current taxable income. It’s a rare win-win in the tax world.

2025 Retirement Contribution Limits:

Solo 401(k):

• Contribute up to $23,500 as an employee (if under 50)
  
  
• Add an additional $7,500 if you’re 50 or older (total = $31,000)
  
  
• Plus, contribute up to 25% of your compensation as the employer
  
  
• Maximum total contribution: $69,000 in 2025 (or $76,500 if over 50)
  
  

SEP IRA:

• Contribute up to 25% of net self-employment earnings
  
  
• Max contribution cap for 2025: $69,000
  
  

Not sure which plan makes more sense? That’s what your Austin tax accountant is here for.

Why This Matters Right Now:

Every dollar you contribute reduces your adjusted gross income, which can:

• Lower your overall tax liability
  
  
• Increase your eligibility for deductions like the Qualified Business Income Deduction (QBID)
  
  
• Help you stay under IRS income thresholds for phaseouts and penalties
  
  

At Insogna CPA, we help business owners build custom retirement strategies that:

• Maximize contributions without overcommitting cash flow
  
  
• Integrate with your S Corp or LLC compensation structure
  
  
• Ensure proper documentation and deadlines to lock in your deduction for 2025
  
  
• Coordinate with your tax preparation services for full visibility
  
  

What Happens When You Skip Deductions Like This?

Here’s what we see far too often from businesses not working with a strategic CPA:

• Entrepreneurs overpaying $10,000+ annually by missing deductions
  
  
• Incorrect depreciation schedules on equipment costing thousands over 5 years
  
  
• Sole proprietors missing QBID due to income structure errors
  
  
• 1099 contractors getting flagged by the IRS for not submitting W-9s or mileage logs
  
  
• Clients forfeiting the Augusta Rule benefit because they didn’t document properly
  
  

These aren’t edge cases. They’re common. And they’re entirely preventable with the right certified public accountant near you, someone who goes beyond basic filing and builds a tax strategy aligned with your goals.

Why Work with Insogna CPA?

We’re not just another listing in your “tax services near me” search.

At Insogna CPA, we offer:

• CPA-led tax preparation services that go beyond data entry
  
  
• Strategic tax planning that aligns with your goals
  
  
• Deep experience with FBAR filing, Section 179 strategy, QBID, and more
  
  
• Full integration with our bookkeeping and accounting services
  
  
• Proactive communication because we don’t just show up at tax time
  
  

Whether you’re looking for a tax advisor near you, a small business CPA Austin, or just someone to help clean up last year’s missed deductions, we’re ready.

Let’s Find the Deductions You’ve Been Missing

Schedule a tax strategy review with Insogna CPA, a leading Austin CPA firm, and let’s:

• Identify missed opportunities
  
  
• Build a proactive tax plan
  
  
• Align your deductions with IRS-compliant documentation
  
  
• And keep more of your profit in your business, where it belongs
  
  

No fluff. No confusion. Just smart, clean, confident tax strategy.

Book your consultation today.
 You run the business, we’ll handle the taxes.

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Summary of What This Blog Covers:

• Compare the differences between an LLC and an S Corporation to determine which structure is right for your business: This blog breaks down how each impacts your taxes, self-employment obligations, and administrative requirements, helping business owners understand when to stick with a simple LLC and when it’s time to consider S Corp status.
  
  
• Learn how S Corp status can reduce self-employment taxes and when it actually adds cost: From paying yourself a reasonable salary to managing payroll and filing Form 1120-S, you’ll get a real-world look at how S Corps save money when your business is ready, and when they become a financial burden if elected too early.
  
  
• Understand key compliance responsibilities and IRS expectations for S Corporations: The blog walks through everything from running payroll and issuing W-2s to handling 1099 NEC forms, FBAR filing, and avoiding costly mistakes that often arise after electing S Corp status.
  
  
• Explore alternatives and get expert support from a CPA firm in Austin, Texas: Whether you’re not ready for an S Corp or you’re unsure what structure makes sense, Insogna CPA offers personalized entity evaluations, Form 2553 filing, tax planning, and full compliance support to help business owners grow with confidence.

Real Talk About Taxes, Take-Home Pay, and When to Make the Switch

Let’s take it back for a second.

You launched your business with a dream and a domain name. You chose “LLC” because, well, it seemed simple. Fast forward, and now you’re making real money. Your business is growing, your tax bills are growing, and you’re hearing a lot of buzz about switching to an S Corporation to “save on taxes.”

Maybe your friend said it. Maybe your accountant hinted at it. Maybe you’ve been Googling “tax preparer near you” at 11 p.m., wondering if you’re missing out on something big.

Before you file Form 2553 and switch your entity type, take a deep breath.

At Insogna CPA, a top-rated Austin Texas CPA firm, we’ve helped hundreds of business owners navigate this exact question:

Is it time to stay the course with your LLC, or are you ready to graduate to an S Corp?

Let’s dig into the details. This blog will help you understand when switching to an S Corp is the move, and when it just adds more headaches (and higher accounting fees).

LLC vs. S Corp: Why This Choice Matters

Choosing the right business structure isn’t just a legal formality, it impacts your:

• Taxes
  
  
• Liability
  
  
• Payroll responsibilities
  
  
• Recordkeeping
  
  
• Compliance load
  
  

The good news? Both LLCs and S Corps offer liability protection and pass-through taxation. But they come with very different compliance rules, tax strategies, and levels of effort.

Whether you’re just starting out or you’re a six-figure solopreneur, understanding the LLC vs. S Corporation breakdown is crucial.

Let’s Define the Terms

• An LLC (Limited Liability Company) is a legal entity formed at the state level.
  
  
• An S Corp is a tax classification granted by the IRS to an LLC or C Corp after filing Form 2553.
  
  

S Corp status changes how your profits are taxed but it doesn’t change your LLC’s legal structure. It’s an election, not a new company.

If you’re unsure whether an LLC or S Corp works best for your goals, a licensed CPA or tax advisor in Austin can help analyze your financials.

LLC vs. S Corp: Quick Comparison

Why Most Start with an LLC

An LLC is a low-maintenance starting point. It gives you:

• Personal liability protection
  
  
• Pass-through taxation
  
  
• No payroll requirements
  
  
• Flexibility to reinvest profits
  
  

When an LLC Makes the Most Sense:

• Your net income is under $50K
  
  
• You’re still building steady revenue
  
  
• You prefer simplicity over compliance
  
  
• You’re not ready to run payroll or file corporate returns
  
  

If you’re searching “small business CPA Austin” or “tax consultant near me” because your profit is rising but you’re not sure if it’s time to switch. We’ll help you compare, side-by-side.

When an S Corp Starts Making Sense

The biggest draw of an S Corporation? Self-employment tax savings.

Sole proprietors and LLC members pay 15.3% self-employment tax on all net profit. But S Corp owners only pay those taxes on their W-2 salary. The remaining profit, taken as distributions, isn’t taxed for Social Security or Medicare.

Real Example:

You earn $100K in net profit.

• As an LLC: You pay 15.3% on all $100K = $15,300.
  
  
• As an S Corp: Pay yourself a $50K salary (taxed normally), take the remaining $50K as distributions (not taxed for SE tax).
  Savings: ~$7,650.
  
  

When It’s Time to Consider an S Corp:

• Your net profit is $50K+
  
  
• You can justify a reasonable salary
  
  
• You’re ready for payroll, tax filings, and recordkeeping
  
  

A qualified Austin TX accountant or tax professional near you can help assess your situation.

But Wait, S Corps Have Their Own Costs

Here’s where entrepreneurs often get caught off guard. S Corps save on taxes but they come with added complexity and cost.

Required for S Corps:

• W-2 payroll (even if you’re the only employee)
  
  
• Payroll provider fees
  
  
• Quarterly payroll tax filings (Form 941, state forms)
  
  
• Form 1120-S (your separate business return)
  
  
• W-2 and 1099 filings
  
  
• Annual compliance documentation (bylaws, minutes, etc.)
  
  

Cost Estimate:
 You could spend $1,500–$3,000+ annually on payroll processing, CPA fees, and compliance filings.

Still think you’re ready? Let a certified CPA near you break it down.

The Key to S Corp Success: Reasonable Salary

Here’s where a lot of S Corps get tripped up: owners try to pay themselves next to nothing and take the rest in distributions.

Bad idea.

The IRS requires you to pay a reasonable salary before taking distributions.

What’s “Reasonable”?

• Comparable to others in your industry/role
  
  
• Reflects your workload
  
  
• Backed by market data (yes, the IRS checks)
  
  

Pay too little = red flag.
 Pay too much = no tax savings.

We help you set this up with compliant W-2 payroll that’s IRS-proof, accurate, and part of your overall tax preparation services.

Don’t Forget: Forms, Filings & FBAR

Once you elect S Corp status, your tax world changes.

You Must:

• File Form 1120-S
  
  
• Issue yourself a W-2
  
  
• Issue 1099 NEC forms to contractors
  
  
• Collect W9 tax forms from every freelancer you work with
  
  
• Report foreign bank accounts over $10K with FBAR filing (FinCEN Form 114)
  
  
• Track 1099K income if you use platforms like PayPal or Stripe
  
  

This is why so many of our clients come to us after searching “CPA office near me” or “tax help near me.” Because you’re not just running a business, you’re now running a tax-compliant corporation.

What If You’re Not Ready for an S Corp?

That’s okay. There’s more than one way to reduce your tax burden without switching to an S Corp too early.

Smart Alternatives:

• Stick with your LLC, and use a Solo 401(k) or SEP IRA to lower taxable income.
  
  
• Build a plan to hit $50K+ in net profit so that switching later will deliver maximum ROI.
  
  
• Talk to a certified general accountant or taxation accountant about multi-entity strategy or deferred tax planning.
  
  

We’re not here to rush your decision. We’re here to get it right, for the long run.

What You Get with Insogna CPA

Whether you’re operating as an LLC, already an S Corp, or unsure what any of this means, we can help.

Our Services Include:

• Entity strategy sessions (LLC vs. S Corp vs. C Corp)
  
  
• Form 2553 filing and IRS correspondence
  
  
• Reasonable salary benchmarking and W-2 setup
  
  
• Full-service tax preparation services near you
  
  
• Payroll implementation and ongoing compliance
  
  
• FBAR filing, W9 collection, and 1099 NEC issuance
  
  
• Strategic tax planning from a certified public accountant near you
  
  

We’re not just one of many Austin CPA firms. We’re a team of detail-obsessed, entrepreneur-loving tax experts who speak your language.

Final Thoughts: It’s Not Just About Tax Savings, It’s About Strategy

An S Corp isn’t a cheat code, it’s a strategic move that works best when your business is ready. If you jump in too soon, it can become an expensive, paperwork-filled mess.

If you’re scaling, earning $50K+ in net profit, and ready to level up with CPA-certified support, we’ll help you transition the right way.

And if you’re not quite there yet? No problem. We’ll help you build toward it with tax savings every step of the way.

Book Your LLC vs. S Corp Consultation Today

Stop wondering. Stop guessing.

Schedule a consultation with Insogna CPA, your go-to CPA in Austin, Texas, and let’s make sure your business structure is designed to maximize your profits not your tax bill.

Because the only thing better than growing your business… is keeping more of what you earn while doing it.

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Summary of What This Blog Covers:

• Uncover when S corporation status actually saves money and when it doesn’t: This blog explores how switching to an S Corp can reduce self-employment tax, but also shows how added payroll, compliance, and tax filing costs can cancel out savings if your net profit isn’t high enough.
  
  
• Learn how to calculate a reasonable salary and avoid IRS red flags: You’ll discover why paying yourself the right amount as an S Corp owner is critical, what the IRS expects, and how a certified public accountant can help you determine the right number based on your role and industry.
  
  
• Understand the administrative and tax filing responsibilities that come with S Corp status: From Form 1120-S and W-2s to quarterly payroll filings and FBAR reporting, this guide outlines everything you need to know before making the S Corp leap.
  
  
• Get expert guidance from a licensed CPA in Austin, Texas before filing Form 2553: The blog explains how Insogna CPA helps business owners evaluate tax structure options, file S Corp paperwork, manage compliance, and optimize their tax strategy year-round.

Let’s clear the air.

You’ve been growing your business. Maybe you’re finally seeing consistent five-figure months, or you’ve hit that six-figure stride. And naturally, you’re thinking, “Time to level up. Should I switch to an S Corp?”

Your internet search results probably tell you yes. Your favorite finance influencer says absolutely. Even your neighbor with the landscaping business swears it cut his tax bill in half.

But what if I told you they might all be… partially right and also missing the bigger picture?

At Insogna CPA, a leading CPA firm in Austin, Texas, we’ve helped hundreds of business owners assess this very question. The truth is, S Corporations can save you money but only if your business is ready. Jump in too early or without a strategy, and your S Corp may cost you more than it saves.

Let’s walk through when an S Corp is brilliant… and when it’s just a shiny tax trap in disguise.

Why Everyone Talks About S Corps and What They’re Not Saying

The S Corp strategy has gone viral in recent years, especially among self-employed professionals, consultants, and small business owners.

And to be fair, there’s a reason it gets so much attention:

“Elect S Corp status, pay yourself a salary, take the rest as distributions, and save on self-employment taxes!”

Sounds amazing, right?

The theory: as an S Corporation, your business can pay you a salary, and then you take any remaining profit as dividends or distributions—which are not subject to self-employment tax. That 15.3% you’ve been paying on all your income as a sole proprietor? Gone. Or at least reduced.

So, what’s the catch?

The Real Costs Behind S Corporation Status

Before you file Form 2553 and become an S Corp overnight, you need to know what you’re signing up for. Because for every dollar you save on self-employment tax, you could be spending more than a few cents in new compliance costs.

Here’s what switching to an S Corp really means:

1. Payroll Processing Is Mandatory

Even if you’re the only employee in your business, S Corp owners are legally required to pay themselves a reasonable salary through payroll.

That means:

• Choosing a payroll provider (Gusto, ADP, etc.)
  
  
• Withholding federal and state income tax
  
  
• Paying employer payroll taxes (Social Security + Medicare)
  
  
• Filing quarterly payroll tax forms (Form 941), W-2s, and state unemployment forms
  
  

This isn’t optional. Even a single-person S Corporation needs full payroll.

Cost Estimate: $600–$1,200/year in payroll processing and employer tax obligations

2. Your Tax Return Just Got a Lot More Complicated

Unlike a sole proprietorship or single-member LLC (which files Schedule C with your personal return), an S Corp files Form 1120-S, a separate corporate tax return.

And if you’re paying yourself a salary? That means:

• Filing a W-2 as your own employee
  
  
• Preparing a K-1 to report your business earnings
  
  
• Possibly filing state S Corp returns (even if Texas doesn’t have income tax)
  
  

More forms, more paperwork, more room for error and yes, higher CPA fees.

Cost Estimate: $1,200–$2,500/year in additional accounting and tax prep costs

3. You Have More Administrative Responsibility

Running an S Corp also means:

• Holding annual meetings (yes, even if it’s just you)
  
  
• Keeping corporate minutes and bylaws
  
  
• Opening separate bank accounts
  
  
• Being prepared for an IRS audit if your salary is questioned
  
  

This isn’t casual entrepreneurship anymore. You’re running a corporation now and that comes with legal obligations.

If you’re not ready to stay organized, this can get messy fast. That’s why having a tax advisor near you who understands your entity structure is critical.

When an S Corp Actually Makes Sense

So, with all that, is it ever worth it?

Yes, but only when the math works.

Our General S Corp Rule of Thumb:

• Under $50K in net profit? Stick with your LLC or sole proprietorship.
  
  
• $50K–$75K in net profit? Run the numbers with a CPA and evaluate the break-even point.
  
  
• $100K+ in net profit? Time to seriously consider the S Corp. You’re probably ready.
  
  

Let’s say your business earns $120,000 in net income (after expenses). As a sole proprietor, you’d owe 15.3% self-employment tax on the full amount: roughly $18,360.

As an S Corp, if you pay yourself a reasonable salary of $60,000 and take the rest as distributions, you only pay self-employment tax on the salary portion, saving you roughly $9,000.

Subtract out payroll and CPA costs, and you could still walk away with $5,000–$7,000 in real annual tax savings.

That’s not pocket change and we help our clients get there.

The Importance of a “Reasonable Salary”

Now let’s talk about the IRS’s favorite phrase: reasonable compensation.

When you’re an S Corp owner, you can’t just pay yourself $10,000 and take $90,000 in distributions. The IRS watches this closely.

The Salary Must Be:

• Similar to what someone in your industry/role would be paid
  
  
• Consistent with the hours you work
  
  
• Backed by market data or benchmarks
  
  

Pay yourself too little? Risk audit and penalties. Pay yourself too much? You erase your tax savings.

At Insogna CPA, we help you determine this salary based on IRS standards, your revenue, and your role. We also make sure your payroll, W-2s, and taxes are all filed correctly.

FBAR Filing, 1099s, and Other IRS Traps

If you operate multiple entities or handle money internationally, there’s more to think about.

Additional S Corp Responsibilities:

• Collecting W9 tax forms from all contractors
  
  
• Issuing 1099 NEC forms to anyone you pay $600+
  
  
• Receiving 1099K forms from Stripe, PayPal, or Square
  
  
• Filing FBAR (Foreign Bank Account Report) if your foreign accounts exceed $10,000
  
  

A missed filing or form, especially an FBAR, can lead to penalties of $10,000 or more.

This is why working with a licensed CPA or certified professional accountant (like our team at Insogna CPA) is crucial. You need someone who watches the fine print, so you can focus on your clients and revenue.

S Corp Alternatives to Consider

Still not sure about S Corp status? That’s okay. It’s not for everyone.

Here are a few alternatives:

• Stay a single-member LLC, and reinvest profits to grow.
  
  
• Use a solo 401(k) or SEP IRA to reduce taxable income.
  
  
• Consider an LLC taxed as a partnership if you have a co-founder.
  
  

Your business structure should match your goals, income, and capacity for compliance. At Insogna CPA, we help you compare all options, not just push the “S Corp button.”

How We Help at Insogna CPA

Here’s what you get when you work with us (besides peace of mind):

• Personalized S Corp evaluation using your real financials
  
  
• Form 2553 filing and S Corp setup, handled start to finish
  
  
• Reasonable salary calculation with IRS-compliant documentation
  
  
• Complete tax preparation services, including Form 1120-S, W-2s, and payroll
  
  
• Quarterly reviews and annual tax planning
  
  
• Filing of FBAR, 1099s, and W9s, with audit-ready records
  
  

Whether you’re searching for a tax preparer near you, a CPA near you, or just someone who actually picks up the phone when you call, we’ve got you.

Final Thoughts: Know Before You Elect

Electing S Corp status isn’t something you want to undo later. The paperwork alone will make your head spin. So get it right the first time.

If your profits are steady, your admin game is solid (or your CPA is), and your business is ready for the next level, S Corps can absolutely reduce your tax burden and increase your take-home pay.

But if you’re still building, still side-hustling, or just not ready for the extra complexity, you might be better off waiting until the numbers make sense.

Book Your S Corp Strategy Session Today

Still wondering whether an S Corp will save you money or cost you more?

Let’s find out together.

Schedule a consultation with Insogna CPA, your go-to Austin, Texas CPA, and let’s crunch the numbers, evaluate the structure, and build a tax strategy that truly fits your business.

Because the only thing better than a thriving business is a thriving business with a smart, efficient tax plan.

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