Retirement

401K vs. IRA: Which Retirement Plan is Best for eCommerce Sellers?

Running an eCommerce business is already a juggling act—inventory, marketing, customer service, and keeping up with ever-changing algorithms. But while you’re optimizing ads and scaling sales, there’s one thing you can’t afford to ignore: your future.

You work hard for your money, so how do you make sure it works just as hard for you? The right retirement plan can mean the difference between financial freedom and playing catch-up later. Whether it’s a Solo 401(k), a SEP-IRA, or a Roth IRA, you’ve got options. The key is knowing which one fits your business and your goals.

Not sure where to start? Don’t worry, that’s where we come in. At Insogna CPA, one of the best CPA firms in Austin, Texas, we specialize in helping business owners like you make smart financial moves, minus the jargon. Let’s break it all down.

The Best Retirement Plans for eCommerce Sellers

If you don’t have a traditional job with a company-sponsored 401(k), saving for retirement falls entirely on you. The good news? You get to pick the plan that works best for your business. Here are your top three options:

1. IRA (Traditional or Roth): The Simple and Flexible Option

Best for: New or small-scale eCommerce sellers who want an easy, no-fuss way to save.

How it works:

You can contribute up to $7,000 per year ($8,000 if you’re 50+).
Anyone with earned income can open an IRA.
There are two types:
- Traditional IRA: Contributions may lower your taxable income now, but you’ll pay taxes when you withdraw later.
- Roth IRA: Contributions are after-tax, but your withdrawals in retirement are tax-free.

Why you’ll love it:
✔ No complicated setup. Just open an account and start saving.
✔ Roth IRA means tax-free growth—yes, really tax-free.
✔ Traditional IRA lets you lower taxable income today.

What to consider:
❌ Contribution limits are lower than 401(k) or SEP-IRA.
❌ Roth IRA has income limits—if you make too much, you may not qualify.

If you’re keeping things simple and don’t want to deal with business paperwork, an IRA is a great starting point. A quick chat with an Austin tax accountant can help you decide between Roth and Traditional.

2. SEP-IRA: The Power Move for Self-Employed Sellers

Best for: Growing eCommerce businesses or freelancers with variable income.

How it works:

You can contribute up to 25% of your net earnings (capped at $69,000 in 2024).
Tax-deductible contributions lower your taxable income.
Ideal if you’re self-employed or have a small team.

Why you’ll love it:
✔ Much higher contribution limits than an IRA.
✔ Flexible—no required contributions each year.
✔ Easy setup with little administrative hassle.

What to consider:
❌ If you have employees, you must contribute the same percentage for them.
❌ No Roth (tax-free withdrawal) option—your money grows tax-deferred, but you’ll pay taxes when you withdraw.

If your business is taking off and you want to stash away more money while lowering your tax bill, a SEP-IRA is a great tool. And trust us—working with a CPA in Austin, Texas makes setting it up a breeze.

3. Solo 401(k): Max Out Your Retirement Savings

Best for: High-earning eCommerce sellers who want to invest aggressively for the future.

How it works:

You can contribute up to $23,000 as an employee (+$7,500 if you’re 50+).
As your own “employer,” you can also contribute up to 25% of your earnings, with a total cap of $69,000.
Tax-deductible contributions lower your taxable income, or choose the Roth option for tax-free withdrawals in retirement.

Why you’ll love it:
✔ Biggest contribution limits—perfect if you’re making serious profits.
✔ You control how much to save each year.
✔ Offers both pre-tax (Traditional) and after-tax (Roth) options.

What to consider:
❌ If your plan balance exceeds $250,000, you’ll have to file additional IRS paperwork.
❌ More setup and admin work than an IRA or SEP-IRA.

If you want maximum tax advantages and the ability to save aggressively, a Solo 401(k) is hard to beat. Not sure how to get started? That’s what Austin accounting firms like Insogna CPA are here for.

Which Plan Makes the Most Sense for You?

Still torn? Here’s a quick cheat sheet:

Your Situation	Best Plan
Just starting out, want something simple	Traditional or Roth IRA
Growing business, need flexibility	SEP-IRA
High profits, want to save aggressively	Solo 401(k)
Have employees and want to offer benefits	Traditional 401(k) (not covered in this article)

The bottom line? There’s no one-size-fits-all retirement plan, but there is one that fits you. A quick consultation with an Austin small business accountant can help you choose the smartest path forward.

Let’s Talk About Your Future

Your business is thriving now, but what about 20 or 30 years from today? Choosing the right retirement plan today means securing the financial freedom to live life on your own terms later.

At Insogna CPA, we help eCommerce sellers like you navigate tax strategies, maximize retirement savings, and build real wealth without the guesswork. Whether you’re searching for an Austin tax accountant, a small business CPA in Austin, or an expert tax advisor in Austin, we’re ready to help.

Let’s build wealth while you grow your business. Contact Insogna CPA today.

What is Amortization? A Guide for Film and Creative Industry Entrepreneurs

Managing production costs in the film and creative industry can be complex, especially when it comes to tax strategies. Whether you’re an independent filmmaker, producer, or content creator, understanding amortization can be a game-changer for both compliance and cash flow management.

At Insogna CPA, a trusted accounting firm in Austin, we specialize in helping creative entrepreneurs like you simplify financial concepts and maximize tax advantages. Let’s break down amortization and why it matters for your production business.

What is Amortization?

Amortization is an accounting method used to spread the cost of an asset over its useful life. In the film industry, this concept applies to production costs. Rather than deducting all expenses in the year they’re incurred, amortization allows you to spread the cost across multiple years as the project generates revenue.

Example:
If you spend $100,000 producing a short film expected to generate income for three years, instead of deducting the full $100,000 immediately, you can amortize the expense and deduct around $33,333 per year for three years.

Why it Matters:

Helps align expenses with revenue.
Reduces taxable income gradually over time.
Provides a clearer picture of your project’s profitability.

As a leading small business CPA in Austin, TX, Insogna CPA helps creative professionals manage this process efficiently while ensuring compliance with IRS guidelines.

Amortization and Section 181: Maximizing Your Deductions

The Section 181 tax incentive offers a unique benefit for qualifying film and television productions. This IRS provision allows eligible production costs to be fully deducted in the same year they are incurred instead of being amortized over time.

Key Benefits of Section 181:

Immediate Deduction: Deduct up to $1 million in qualifying production costs in the year the expenses occur.
Multiple Projects: Apply Section 181 deductions to multiple productions within the same year.
S. Filming Requirement: Projects must be primarily filmed within the United States to qualify.

Example:
If you produce a documentary with a $750,000 budget and qualify for Section 181, you could deduct the entire $750,000 from your taxable income that same year.

Not sure if your project qualifies? Our CPA firm in Austin, Texas offers specialized support for creative entrepreneurs to ensure proper filing and maximize deductions.

Amortization vs. Depreciation: Key Differences

While amortization and depreciation both involve spreading costs over time, they apply to different types of assets:

Amortization: Used for intangible assets like production costs, intellectual property, and script rights.
Depreciation: Used for tangible assets like cameras, lighting equipment, and production sets.

At Insogna CPA, a trusted Austin accounting firm, we help film producers determine when to use amortization versus depreciation for optimal tax savings.

How Amortization Works in Film Production: Step-by-Step Example

Let’s break it down further:

Scenario: You invest $120,000 in producing a feature film. The project will generate revenue over four years.

Amortization Schedule:

Year 1: Deduct $30,000
Year 2: Deduct $30,000
Year 3: Deduct $30,000
Year 4: Deduct $30,000

This method ensures the production costs are spread over the project’s revenue-earning lifespan, providing a balanced tax strategy.

However, if your production qualifies for Section 181, you could deduct the full $120,000 in Year 1 instead, leading to immediate tax savings.

Why Proper Documentation is Essential

To claim production cost deductions through amortization or Section 181, accurate record-keeping is critical. Without proper documentation, you risk IRS scrutiny or losing valuable deductions.

Key Documents to Maintain:

Production Budgets & Invoices: Clear records of all production-related expenses.
Contracts & Agreements: For talent, crew, and vendors involved in the project.
Revenue Tracking: Detailed statements showing when and how the production generates income.

At Insogna CPA, a leading small business CPA in Austin, we ensure our clients maintain proper documentation to maximize their tax savings while staying compliant.

Why Creative Entrepreneurs Need CPA Support for Amortization

Navigating IRS rules on amortization and Section 181 can be overwhelming, especially for creatives balancing multiple projects. Working with a professional CPA ensures you:

Maximize eligible tax deductions.
Stay compliant with complex IRS regulations.
Avoid costly mistakes in documentation or filing.

As a top-rated CPA in Round Rock TX and Austin, we specialize in production accounting and have supported countless creative businesses with strategic tax planning.

Frequently Asked Questions About Amortization for Film Production

Q: Can I use both amortization and Section 181?
A: No. Section 181 allows full deductions upfront, while amortization spreads costs over time. However, you can choose different methods for separate projects.

Q: What if my project doesn’t qualify for Section 181?
A: If Section 181 eligibility is limited, standard amortization remains a reliable strategy for gradually deducting costs.

Q: Can I apply Section 181 to international projects?
A: No, Section 181 requires the majority of production to occur within the U.S.

Maximize Your Production Tax Benefits with Insogna CPA

Understanding amortization and tax strategies like Section 181 can be the difference between a financially successful project and one burdened by tax liabilities. At Insogna CPA, we simplify complex accounting for creative entrepreneurs, ensuring you focus on your art while we handle the numbers.

As a top-rated accounting firm in Austin Texas, we provide:

Specialized Tax Planning for Film & Media Projects
Section 181 Compliance Support
Expert Amortization and Depreciation Strategies

Ready to maximize your production tax savings? Contact Insogna CPA, a trusted small business CPA in Austin TX for expert production accounting today!

Backdoor Roth IRA: The Secret Strategy High-Income Earners Use to Save for Retirement

Saving for retirement gets trickier as your income grows. High-income earners often find themselves unable to contribute directly to a Roth IRA due to IRS income limits. However, there’s a way around this obstacle: the backdoor Roth IRA.

This strategy offers a legal and effective way to enjoy the benefits of a Roth IRA—such as tax-free growth and withdrawals—while bypassing income restrictions. In this article, we’ll break down how the backdoor Roth IRA works, why it’s valuable for high earners, and how Insogna CPA, one of the top accounting firms in Texas, can help you implement it seamlessly.

What Is a Backdoor Roth IRA?

A backdoor Roth IRA is a strategic method for converting non-deductible Traditional IRA contributions into a Roth IRA. It allows high-income earners to fund a Roth IRA indirectly, taking advantage of its many benefits.

Why It’s Valuable:

Tax-Free Growth: Once converted, your investments grow tax-free, an excellent advantage for long-term savers.
Tax-Free Withdrawals: Qualified withdrawals during retirement are tax-free, providing flexibility to manage taxable income.
No RMDs: Roth IRAs are not subject to required minimum distributions (RMDs), unlike Traditional IRAs.

Why High-Income Earners Use Backdoor Roth IRAs

The IRS restricts direct contributions to Roth IRAs for high earners. For 2023:

Single filers with incomes over $153,000 are ineligible.
Married couples filing jointly are disqualified if their combined income exceeds $228,000.

Fortunately, there are no income limits for contributing to a Traditional IRA or for converting those funds to a Roth IRA. This loophole is what makes the backdoor Roth IRA strategy so effective.

At Insogna CPA, an Austin, TX accountant team with deep expertise in retirement planning, we’ve helped many clients leverage this strategy to maximize their savings while staying compliant with IRS rules.

How to Implement a Backdoor Roth IRA

Here’s a simple, step-by-step process for executing a backdoor Roth IRA:

Step 1: Contribute to a Traditional IRA

Open a Traditional IRA and make a non-deductible contribution. For 2023, the annual contribution limit is $6,500 ($7,500 if you’re 50 or older).

Pro Tip: Complete the conversion quickly to avoid any taxable gains in the Traditional IRA.

Step 2: Convert to a Roth IRA

Once the funds are in the Traditional IRA, convert them to a Roth IRA. Since the initial contribution was non-deductible, the tax liability on the conversion is minimized.

Timing Is Key: The sooner you convert, the fewer taxable earnings the funds will generate.

Step 3: Manage Taxes (If Applicable)

If you’ve earned income on the contributions before converting, those earnings will be subject to income tax. However, if you act quickly, the tax impact should be negligible.

Navigating the Pro-Rata Rule

While the backdoor Roth IRA is straightforward, the pro-rata rule can complicate things if you have other pre-tax IRA balances. This rule requires you to calculate the taxable portion of your conversion based on the ratio of after-tax contributions to your total IRA balance.

For example:

If you have $50,000 in pre-tax IRAs and make a $5,000 after-tax contribution, only 10% of the conversion will be tax-free.

Work with a CPA to minimize the tax impact. At Insogna CPA, a leading accounting firm in Austin, we handle the calculations and ensure that the strategy aligns with your financial goals.

Benefits of a Backdoor Roth IRA

1. Tax-Free Growth

Once converted, the Roth IRA offers tax-free investment growth, which can significantly boost your retirement savings over time.

2. Tax Diversification

Having a mix of taxable, tax-deferred, and tax-free retirement accounts gives you flexibility to optimize withdrawals and minimize taxes in retirement.

3. Avoid RMDs

Unlike Traditional IRAs, Roth IRAs aren’t subject to required minimum distributions, allowing your funds to grow untouched for longer.

4. Estate Planning Advantages

Roth IRAs allow heirs to withdraw funds tax-free, making them an excellent tool for generational wealth transfer.

Is a Backdoor Roth IRA Right for You?

This strategy is ideal for:

High-income earners who exceed the IRS income limits for direct Roth IRA contributions.
Entrepreneurs and professionals maximizing other retirement accounts, like 401(k)s.
Individuals seeking tax-free growth and flexibility in retirement.

If you have pre-tax IRA balances, consider consulting with a personal CPA in Austin to evaluate whether the pro-rata rule impacts the strategy’s benefits.

How Insogna CPA Helps

At Insogna CPA, one of the most trusted Austin CPA firms, we specialize in helping high-income earners implement advanced retirement strategies like the backdoor Roth IRA.

Personalized Planning: Our team ensures this strategy aligns with your broader financial goals.
Pro-Rata Rule Expertise: We handle the complexities of calculating taxable conversions for clients with existing IRA balances.
Compliance and Reporting: Proper documentation is critical, and we ensure every step is IRS-compliant.

Take Action: Maximize Your Retirement Savings

The backdoor Roth IRA is one of the most effective tools for high-income earners looking to save more for retirement. By understanding how this strategy works and partnering with experts, you can unlock tax-free growth, enjoy flexibility in retirement, and ensure your savings work as hard as you do.

Ready to secure your financial future? Contact Insogna CPA, an experienced tax advisor in Austin, today. Let us help you turn the backdoor Roth IRA into a cornerstone of your retirement plan!

Are You Missing Out on Tax-Advantaged Investments? Discover Opportunities to Grow Wealth and Save Taxes

As a high earner or business owner, tax season can often highlight just how much of your income goes to the IRS. But what if you could significantly lower your tax liability while growing your wealth at the same time? Many professionals and entrepreneurs are leaving money on the table by not exploring tax-advantaged investments like oil and gas leases, renewable energy projects, or conservation easements.

At Insogna CPA, a trusted tax accountant in Austin, we specialize in helping clients like you uncover these opportunities. Our team works with individuals and business owners across industries to leverage tax-saving strategies and long-term investment benefits.

The Problem: High Taxes and Missed Opportunities

Without proactive tax planning, high-income earners often pay more in taxes than they need to. Common challenges include:

Limited Awareness: Many individuals stick to traditional savings vehicles like 401(k)s and IRAs because they’re unaware of alternative investments.
Complex Regulations: Options like oil and gas leases or conservation easements require deep tax knowledge to implement correctly.
Perceived Risk: Without guidance from trusted professionals, these investments can feel intimidating.

This combination often leaves business owners, high earners, and entrepreneurs paying more taxes and missing opportunities to diversify their portfolios and build wealth.

The Solution: Leverage Tax-Advantaged Investments

Tax-advantaged investments are designed to incentivize participation in industries or initiatives that benefit the economy, environment, or national security. By including these in your portfolio, you can lower your taxable income, gain first-year deductions, and open the door to future income growth.

Here’s a closer look at some of the most effective options:

1. Oil and Gas Leases

Investing in oil and gas projects offers unique tax incentives that can dramatically reduce your tax bill.

The Benefits: Intangible drilling costs (IDCs) allow you to deduct up to 70-80% of your investment in the first year.
Who It’s For: High-income earners seeking substantial first-year deductions and potential future income streams.
Guidance You Need: At Insogna CPA, a leading Austin CPA firm, we connect clients with trusted advisors to ensure compliance and maximize returns.

2. Conservation Easements

Conservation easements or wildlife funds allow you to preserve natural habitats while enjoying significant tax savings.

The Benefits: Deduct up to 50% of your adjusted gross income by donating development rights on qualifying land.
Who It’s For: Those interested in both environmental conservation and reducing taxable income.
Austin’s Accounting Services: Insogna CPA ensures these complex deductions align with your overall financial strategy.

3. Renewable Energy Investments

Supporting renewable energy projects, such as solar or wind initiatives, offers both tax credits and deductions.

The Benefits: Federal tax credits can offset a significant portion of your initial investment, while accelerated depreciation reduces taxes further.
Who It’s For: Entrepreneurs and investors looking to diversify their portfolios.
Why Insogna CPA? We’re known as one of the top accounting firms in Texas for guiding clients through tax-efficient investments like these.

How Insogna CPA Helps You Maximize These Benefits

Navigating tax-advantaged investments requires an experienced team to ensure you’re fully compliant with tax laws and achieving your goals. As a leading accounting firm in Austin, Insogna CPA specializes in these strategies.

Here’s how we support you:

Personalized Planning: Whether you’re a small business owner or a high earner, we analyze your income, tax obligations, and financial goals to recommend the right investments.
Vetted Partnerships: Through our connections with trusted advisors, we ensure your investments are legitimate and aligned with your objectives.
Ongoing Support: Tax laws and regulations are constantly evolving. As one of the most trusted CPA firms in Austin, Texas, we’ll monitor changes to keep your strategy optimized.

Tax Benefits You Can’t Afford to Miss

Imagine reducing your taxable income by tens of thousands of dollars in just one year. For example:

An investment of $100,000 in oil and gas leases could result in $70,000-$80,000 in first-year deductions.
Participating in conservation easements could lower your adjusted gross income while contributing to environmental preservation.
Renewable energy projects offer tax credits that offset your investment while generating long-term returns.

As a high earner, these strategies aren’t just an opportunity—they’re a necessity. At Insogna CPA, a small business CPA in Austin, TX, we make sure you take full advantage of these tools.

Why Choose Insogna CPA?

At Insogna CPA, we’re more than just an Austin accounting service—we’re your partners in growing and protecting your wealth. Our team has extensive experience working with high-income earners and entrepreneurs, offering:

Customized strategies for tax-advantaged investments.
Expertise as a top tax advisor in Austin with a focus on compliance and optimization.
A track record of helping clients maximize deductions and reduce tax burdens.

Don’t Leave Money on the Table

If you’re paying more in taxes than you should, or if your current investments aren’t working as hard as they could, it’s time to explore tax-advantaged opportunities. From oil and gas leases to conservation easements, Insogna CPA is here to help you uncover the investments that can grow your wealth while reducing your taxes.

Ready to see how much you could save? Contact Insogna CPA, one of the best CPA firms in Austin, today for a personalized consultation!

Maximizing Real Estate Partnerships: Tax Prep Tips for Siblings, Spouses, and Families

Struggling to manage taxes for your family’s real estate partnership? You’re not alone. Many families—whether siblings, spouses, or extended relatives—choose to invest in real estate together to build wealth. However, when it’s time to file taxes or allocate income, things can quickly become complicated. Misunderstandings over ownership, missed deadlines, and overlooked deductions can lead to costly mistakes or even strained relationships.

The good news? These challenges are avoidable with the right strategy. In this guide, we’ll explore the unique tax preparation issues family partnerships face, explain why they happen, and provide actionable solutions to help you stay organized, compliant, and stress-free.

At Insogna CPA, one of the top accounting firms in Texas, we specialize in guiding real estate investors through the complexities of family partnerships. Whether you need a personal CPA in Austin or a CPA in Round Rock, TX, we’re here to help.

The Problem: Family Partnerships and Real Estate Taxes Can Be Complex

Family partnerships are popular because they allow family members to pool resources, share ownership, and generate income from real estate investments. However, with that flexibility comes complexity, especially at tax time.

Here’s where most families run into trouble:

Filing Partnership Tax Returns: Unlike individual property ownership, family partnerships require a formal Form 1065 (U.S. Return of Partnership Income). Many families are unfamiliar with this process, leading to mistakes or missed deadlines.
Allocating Ownership and Income: Family members may contribute differently—one may invest money while another manages the property. Without clear agreements, disputes over profit distribution can arise.
Missing Tax Deductions: Rental properties come with valuable deductions (like mortgage interest and depreciation), but many families overlook them, leaving money on the table.
Lack of Proper Record-Keeping: Poor documentation of expenses, income, and ownership contributions makes tax prep disorganized and increases the risk of audits.

If this sounds familiar, you’re not alone. Family partnerships often lack the structure of professional business ventures, which is why proper tax planning and preparation are critical.

Why These Problems Happen

Managing taxes for a family-owned real estate partnership can feel overwhelming for a few key reasons:

Lack of Defined Roles: Many families enter partnerships informally without clear agreements about ownership percentages or responsibilities.
Unfamiliarity with Partnership Taxes: Families may not realize that partnerships require specific tax filings, including Form 1065 and Schedule K-1 for each partner.
Complex Income and Deductions: Rental income and expenses must be tracked carefully, and deductions like depreciation require precise calculations.
Emotion Over Strategy: Family partnerships can blur the lines between personal and business decisions, leading to disagreements or confusion.

The result? Missed opportunities to reduce tax liabilities, IRS penalties for filing errors, and potential conflicts among family members.

The solution is to approach your real estate partnership like a business—organized, strategic, and proactive.

The Solution: Clear Steps to Simplify Family Real Estate Partnership Taxes

Here’s how you can resolve these challenges, streamline your tax preparation, and protect both your investments and family relationships:

Step 1: Formalize Your Partnership Structure

Choosing the right legal structure is the foundation of successful family partnerships. The most common options include:

Limited Liability Company (LLC): Offers liability protection while allowing profits and losses to pass through to individual tax returns. LLCs provide flexibility in ownership and income allocation.
General Partnership (GP): An easy-to-set-up structure where all family members share ownership and management. However, GPs offer no liability protection.
Family Limited Partnership (FLP): A strategic structure that allows families to transfer ownership while maintaining control. FLPs also offer estate tax benefits.

Why It Matters: Proper structuring simplifies tax reporting and ensures all family members understand their roles and responsibilities.

Action Tip: Work with a tax accountant in Austin or a CPA in Round Rock, TX to determine the best structure for your partnership.

Step 2: File Form 1065 and Schedule K-1 Accurately

The IRS requires partnerships to file Form 1065 annually. This form reports the partnership’s total income, expenses, and deductions. Each partner then receives a Schedule K-1, detailing their share of the profits or losses, which they report on their personal returns.

How to Stay Compliant:

Meet Deadlines: Form 1065 is due by March 15 each year. Partners must include K-1 details on their personal returns by April 15.
Double-Check Ownership Percentages: Ensure that profit distribution matches the ownership percentages outlined in your agreement.
Keep Detailed Records: Document all rental income and expenses, including mortgage interest, property taxes, and repairs.

Avoid Penalties: Filing late or inaccurately can result in hefty IRS fines. Partnering with an experienced Austin CPA firm or a CPA South Austin ensures accuracy and compliance.

Step 3: Maximize Tax Deductions

Family partnerships often miss out on valuable tax deductions, leading to higher tax bills than necessary.

Common Deductions for Rental Properties:

Mortgage interest and property taxes
Depreciation (calculated annually)
Repairs and maintenance costs
Travel expenses for property management
Insurance premiums

Action Tip: Work with a small business CPA in Austin, TX or an Austin accounting service to ensure you’re claiming all eligible deductions and reducing your tax liability.

Step 4: Define Ownership and Income Allocation

Avoid disputes by clearly defining ownership percentages and income distribution in a formal operating agreement.

What to Include in Your Agreement:

Each family member’s ownership percentage
Rules for income and loss distribution
Roles and responsibilities (e.g., property management vs. financial contributions)

If special circumstances arise—like one family member managing the property full-time—document these arrangements to ensure fairness.

Action Tip: An Austin accounting firm can help draft an agreement that protects both your family relationships and your financial goals.

Step 5: Stay Organized Year-Round

Poor record-keeping is one of the most common pitfalls in family partnerships. Make tax prep easier by staying organized:

Track all income and expenses using accounting software.
Keep receipts and records for deductible expenses.
Regularly review financial statements to ensure transparency among partners.

Pro Tip: Consider working with accounting services in Austin to stay organized and tax-ready all year long.

Partner with Insogna CPA to Simplify Your Family Real Estate Taxes

Managing a family real estate partnership can be complex, but you don’t have to do it alone. At Insogna CPA, we specialize in helping families like yours structure partnerships, prepare tax filings, and maximize deductions so you can focus on growing your investments.

Our Services Include:

Accurately filing Form 1065 and Schedule K-1s
Structuring your partnership for tax efficiency and liability protection
Identifying and maximizing tax deductions for rental properties
Offering year-round support to keep your records organized

As a trusted Austin TX accountant and one of the best CPA firms in Austin, we’re here to simplify your partnership taxes and give you peace of mind.

Take Control of Your Family Real Estate Partnership Today

Don’t let tax confusion or disorganization hold your family back. By following these steps and partnering with the right tax professionals, you can protect your investments, minimize taxes, and keep family relationships strong.

Ready to simplify your partnership taxes? Contact Insogna CPA today—your trusted tax advisor in Austin—to schedule a consultation and take the stress out of tax season.

S Corp vs. Sole Proprietorship: Which Structure Saves You More in Taxes?

Are self-employment taxes cutting into your profits? If you’re an independent contractor or small business owner operating as a sole proprietor, you might feel the sting of high taxes and limited financial flexibility. While the simplicity of a sole proprietorship is appealing, it often comes at a cost—especially for high earners.

The good news? Electing S Corporation (S-Corp) status can significantly reduce your tax burden and provide additional benefits that support long-term business growth. Here’s how to decide if making the switch is right for you.

The Problem: Sole Proprietorships are Taxing

As a sole proprietor, you report your income and expenses on your personal tax return (Schedule C). While this structure is easy to set up and manage, it comes with some major downsides:

High Self-Employment Taxes: You pay 15.3% in Social Security and Medicare taxes on all net earnings, in addition to regular income taxes.
Limited Tax Optimization: There’s little room to strategically reduce your taxable income or take advantage of certain deductions.
Growth Constraints: The simplicity of a sole proprietorship doesn’t always scale well as your business grows.

Example:
A sole proprietor earning $100,000 in net income pays $15,300 in self-employment taxes alone, plus income taxes based on their tax bracket. Partnering with a reliable tax accountant in Austin could help identify strategies to minimize these expenses.

The Solution: Electing S-Corp Status

For high-earning contractors and business owners, S-Corp status offers a powerful solution to reduce tax liability and open new opportunities for growth.

How It Works

An S-Corp isn’t a separate entity—it’s a tax election you can apply to an LLC or corporation. It allows you to split your income into:

Salary: Subject to payroll taxes.
Distributions: Not subject to self-employment taxes, reducing your overall tax burden.

This simple change can yield substantial tax savings.

Example:
A contractor earning $100,000 as an S-Corp allocates $60,000 as salary and $40,000 as distributions. The salary is subject to Social Security and Medicare taxes, but the distributions are not, saving $6,120 annually in self-employment taxes. Consulting with an Austin, TX accountant ensures your salary-to-distribution ratio complies with IRS regulations.

Why S-Corp Status Makes Sense for Growing Businesses

Here’s why switching to an S-Corp is worth considering:

1. Lower Self-Employment Taxes

With an S-Corp, only your salary is subject to Social Security and Medicare taxes. Distributions—often a significant portion of your income—are exempt, reducing your total tax liability.

2. Access to Additional Deductions

S-Corp owners can deduct health insurance premiums and retirement contributions. These deductions can significantly reduce taxable income when managed by a trusted Austin accounting firm.

3. Scalability for Growth

As your business grows, an S-Corp provides the framework for hiring employees or subcontractors, expanding services, and reinvesting earnings.

4. Enhanced Credibility

An S-Corp structure often appears more professional to clients and investors, which can open doors to new opportunities. CPA firms in Austin, Texas like Insogna CPA specialize in helping businesses achieve these benefits.

Steps to Transition from Sole Proprietorship to S-Corp

If you’re ready to lower your tax burden and take control of your finances, here’s how to get started:

1. Analyze Your Earnings

Evaluate your net income. S-Corp status is typically most beneficial if your business earns $40,000–$50,000 or more annually. An Austin small business accountant can help with this assessment.

2. Set a Reasonable Salary

The IRS requires S-Corp owners to take a “reasonable salary” that reflects market rates. Research salaries for similar roles in your industry or consult a professional for guidance.

3. Factor in Administrative Costs

S-Corp status requires payroll management and a separate tax return. Work with a trusted and dependable CPA in South Austin to ensure these additional responsibilities are handled efficiently.

4. Consult a Tax Advisor

Partner with a trusted tax advisor in Austin to determine the right salary-to-distribution split, maximize deductions, and navigate the paperwork for electing S-Corp status.

Real-World Scenario: How Insogna CPA Can Help a Contractor Save Big

The Challenge:
A graphic designer in Austin, TX, earning $120,000 annually as a sole proprietor faced steep tax bills and limited growth options.

The Solution:
Insogna CPA recommends transitioning to an S-Corp. The designer now can allocate $70,000 as salary and $50,000 as distributions.

The Outcome:

Tax Savings: Reduced self-employment taxes by $7,650 annually.
Growth Opportunities: Simplified hiring subcontractors, enabling business expansion.
Peace of Mind: Insogna CPA handled payroll and compliance, allowing the designer to focus on their craft.

This scenario highlights why Insogna CPA is one of the top accounting firms in Texas for small businesses.

Why Partner with Insogna CPA?

Navigating the complexities of business structuring and tax planning can be overwhelming. At Insogna CPA, we specialize in helping small business owners and independent contractors:

Evaluate Business Structures: Determine whether an S-Corp is right for you.
Streamline Compliance: Handle payroll, filings, and bookkeeping seamlessly.
Optimize Tax Strategies: Maximize deductions and reduce self-employment taxes.
Plan for Growth: Develop proactive financial strategies to support your goals.

As one of the best CPA firms in Austin TX, we’re here to help you make informed decisions that set your business up for long-term success.

Take the Next Step

Choosing the right business structure is essential for maximizing tax savings and achieving your financial goals. If you’re a sole proprietor earning $40,000 or more annually, switching to an S-Corp could save you thousands in taxes and open new opportunities for growth.

Contact Insogna CPA today to schedule a consultation and discover how we can help you optimize your tax strategy and build a smarter financial future.