LUO CPA PLLC

Did you know the IRS can file a tax return on your behalf if you don’t file one yourself? It’s called a Substitute for Return (SFR) — and it’s rarely in your favor. The IRS uses information it already has, such as W-2 and 1099 forms, to prepare the SFR. But it usually skips deductions and credits you may be entitled to, often resulting in a higher tax bill. You could also face penalties, interest and collection actions, such as liens or levies. The good news? You can fix it. Filing an accurate return can generally replace the SFR and may reduce what you owe, though penalties and interest may still apply. Call us at (646) 216-9191 for help.

What’s the right entity type for your new business? Two popular options for closely held businesses with multiple owners are LLCs taxed as partnerships and S corporations. Both offer pass-through taxation, meaning tax items pass through to the individual owners and are reported on their personal returns. But they differ in important ways, such as self-employment tax, loss deductions, ownership flexibility and eligibility requirements. Before making your decision, contact us at(646) 216-9191. Taxes play a pivotal role in this decision. We can work with you and your legal advisors to determine the optimal setup for your situation.

Business owners and self-employed individuals who use their vehicle for business may be able to deduct auto-related expenses. But if a vehicle (including a car, van, pickup or panel truck) is used both for business and personal purposes, the expenses must be split based on mileage. These rules apply to both owned and leased vehicles. There are two methods for calculating auto expenses: actual expenses and the standard mileage rate. Both require careful recordkeeping, though using the mileage rate is generally easier. Contact us at (646) 216-9191 to determine which method makes sense for your situation.

Increasing revenue isn’t the only way to improve your business’s financial performance. Another option is to strengthen your profit margins by analyzing key operating expenses, such as employee compensation and benefits, vendor contracts and leases, marketing return on investment, and borrowing costs. Compare your costs with industry benchmarks and look for overlapping services and avoidable spending. Selectively eliminate costs that don’t add value while continuing to invest in the people and resources your business needs to grow. Call us at (646) 216-9191 for help performing a comprehensive expense review and identifying strategies to improve your profitability and cash flow.

Monthly financial statements are essential. But they often take weeks to prepare and may arrive after you’ve already made critical business decisions. Flash reports can help bridge that gap by providing real-time snapshots of critical metrics — such as cash balances, collections and payroll. These reports provide timely insight into financial performance, allowing you to identify emerging issues before they become major problems. Because flash reports are preliminary, you should use them as management tools, not formal financial statements. Call us at (646) 216-9191 to discuss how customized flash reports can help your business make faster, more informed financial decisions.

The IRS has expanded its Business Tax Account (BTA), making the self-service platform available to partnerships; tax-exempt organizations; federal, state and local governments; and Indian tribal governments. The BTA is a centralized platform that allows eligible users to manage their federal tax responsibilities online. Among other things, BTA users can view tax balances, make payments and see payment history, access eligible payroll and income transcripts, if eligible, and download select digital notices. The newly eligible entities join sole proprietors, S corporations and C corporations that are already able to access the platform. Call us at (646) 216-9191 to discuss your business’s tax obligations.

One of the easiest ways to reduce the size of your taxable estate is to take advantage of your gift tax annual exclusion. For 2026, you can transfer up to $19,000 per recipient gift-tax-free. And you can double the exclusion to $38,000 per recipient if you split the gifts with your spouse. But it’s critical to understand the rules of gift-splitting to avoid unintended tax consequences. To elect to split gifts, the spouse making the gift must file a gift tax return, and the other spouse must consent by checking a box on the return and signing it. Contact us at (646) 216-9191 for additional details.

The Association of Certified Fraud Examiners estimates that businesses lose about 5% of annual revenue to occupational fraud. However, organizations with strong antifraud controls — including external financial statement audits and surprise audits — generally experience lower fraud losses and detect fraud more quickly than organizations without those safeguards. Audits don’t provide a guarantee against fraud, but they can help reveal anomalies and errors and identify weaknesses in your business’s controls. If you have questions about your business’s fraud risks or you’d like to discuss our audit and forensic accounting services, call us at (646) 216-9191. We can help strengthen your fraud defenses.

Roth IRA and Roth 401(k) accounts help you save for retirement with after-tax dollars. Both accounts grow tax-free, and distributions are also tax-free if you meet certain conditions. However, higher earners may be ineligible to contribute to a Roth IRA. Income limits don’t apply to Roth 401(k)s, which also allow higher annual contributions. If you’re unsure where to put your retirement savings, contact us at (646) 216-9191 for more information on the tax considerations.

In general, companies can deduct rent as a business expense on their federal tax return. However, several rules limit this tax break. For example, payments made under a conditional sales contract aren’t deductible as rent. And you can’t deduct “unreasonable” rent. This means it’s higher than market value, such as inflated rent paid to a “related person.” If you pay in advance, you can only deduct rent that applies to your use of the property during the tax year. (You’ll be able to deduct the rest in the year to which the payment applies.) On the other hand, you can usually deduct expenses you’ve paid to cancel a business lease. For help identifying deductible expenses, contact us at (646) 216-9191.