Avoid an IRS audit this tax season
Posted on February 11th, 2013 Read time: 1 minutes
As businesses prepare their tax documents to send off to the IRS, the last thing they want in return is an audit notice. No matter how confident business leaders are in their documentation accuracy, nobody wants to spend the time or resources having to pull up substantial tax proof for the federal agency.
1. Keep records of everything
Maintaining record is important and can reduce the chances of being audited. If an audit occurs, having the right documentation allows businesses to substantiate deductible claims quickly, Forbes explains.
2. Explain all unusual deductibles
Many small businesses claim seemingly large returns for home office expenses, furniture or equipment donations to charity and other deductibles. If IRS professionals spot an unusually large claim, they’ll think it’s being exaggerated, according to SmartMoney. It’s therefore important to provide a reason for these claims and safeguard the proper documentation to substantiate them.
3. File personal and business taxes separately
Self-employed professionals and small-business owners may often mesh business and personal spending, like buying as an investment and using it for pleasure. “These are fertile areas for tax disputes,” Forbes states. It’s better to avoid mixing the two.
4. Outsource payrolling
This limits extra steps businesses have to take throughout the year when it comes to filing taxes.
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Posted on February 11th, 2013 Read time: 1 minutes
As businesses prepare their tax documents to send off to the IRS, the last thing they want in return is an audit notice. No matter how confident business leaders are in their documentation accuracy, nobody wants to spend the time or resources having to pull up substantial tax proof for the federal agency.
1. Keep records of everything
Maintaining record is important and can reduce the chances of being audited. If an audit occurs, having the right documentation allows businesses to substantiate deductible claims quickly, Forbes explains.
2. Explain all unusual deductibles
Many small businesses claim seemingly large returns for home office expenses, furniture or equipment donations to charity and other deductibles. If IRS professionals spot an unusually large claim, they’ll think it’s being exaggerated, according to SmartMoney. It’s therefore important to provide a reason for these claims and safeguard the proper documentation to substantiate them.
3. File personal and business taxes separately
Self-employed professionals and small-business owners may often mesh business and personal spending, like buying as an investment and using it for pleasure. “These are fertile areas for tax disputes,” Forbes states. It’s better to avoid mixing the two.
4. Outsource payrolling
This limits extra steps businesses have to take throughout the year when it comes to filing taxes.
