3 keys to avoiding business audits
If you own a business, you’ve probably spent some sleepless nights, especially around tax time, wondering if this is the year your business is going to be audited by the IRS. Statistics show that the percentage of tax returns that get audited is very small; one out of a hundred businesses gets audited every year. However, if you want to avoid being audited, you need to carefully file your taxes to avoid getting that dreaded audit notice from the IRS.
Business tax audits can be especially frightening if you own a small or mid-sized business because of the possibility of having to pay more taxes on an already limited budget or being held personally liable for any mistakes when you don’t have an accounting department doing your taxes to back you up.
The costs that are associated with negative findings during an audit could effectively wipe out the profits of your business. In addition to keeping accurate and up-to-date books and reporting all income, there are three important ways to ensure that you don’t get audited ever again.
How can you file the taxes for your business and be confident that you’ll avoid being audited? While there are number of things that you can do this tax season to prevent the IRS from flagging your return, the three keys to avoiding an audit include:
- Stop calculating taxes by hand — taxes can be complicated for small and mid-sized business owners who are not experts in finance, so making errors is too much of a possibility.
- Pay taxes proactively — pay quarterly estimated tax payments if you expect to owe at least $500 in taxes; failure to make these payments can result in penalties and increase your risk of being audited.
- Keep better records — keep meticulous, well-organized records so that, if you do get audited, the process will be a much smoother one with records that are easily accessible and well-organized.
While accounting software is a big help when it comes to having well-organized records, it can’t provide you with the representation you need if the IRS audits you.
You don’t have to do it all
If you own a SMB, trying to go it alone at tax time can be very costly in the long run if it results in avoidable errors and/or omissions that end up getting your business audited by the IRS. At GYL, we provide a full range of accounting, auditing, business advisory, and tax services for businesses.
Hiring a CPA can not only increase the accuracy of your return, but can also be a huge help when it comes to avoiding being audited. When you work with GYL, CPA for businesses in San Diego, you can concentrate on keeping up with business, and let us concentrate on ensuring the accuracy of your tax return and reducing your risk of being audited.
Call to set up a free consultation with us today.