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As a small business owner, do you cringe at the thought of being audited by the IRS? You’re not alone. The prospect of an IRS audit can be frightening, costly, and time-consuming. However, the good news is that there are ways to avoid an IRS audit altogether, and Edgewater CPA Group can help you do just that with proper tax prep.
1. Accurately Report All Income & Expenses
One of the most common reasons for an IRS audit is inaccurately reporting your income or expenses. It’s important to keep track of all business transactions, record them properly, and report them accurately on your tax return. Ensure that you use proper classification of your expenses, separating personal expenses from business expenses. Maintain detailed records throughout the year and have a professional double-check your work before filing your tax return.
2. File On Time
Filing your tax returns late could raise a red flag and increase your chances of an audit. Make sure to file your tax returns on time by adhering to federal and state law deadlines. If, for some reason, you cannot file on time, you can request a tax filing extension, provided you make payments due as required.
3. Be Cautious with Deductions
Small business owners who work from home or travel for business purposes are entitled to deduct home office and travel expenses to reduce their tax liability. However, you must be careful when making these deductions, as they are more likely to be audited. Be mindful of the IRS regulations regarding the percentage of home expenses that qualify for a deduction, and keep detailed records of all business-related travel.
4. Take Advantage of Professional Advice
One common mistake small business owners make is not taking advantage of professional services like tax prep, tax resolution, and bookkeeping. But when you partner with Edgewater CPA Group in Carmel, IN, you can rest easy and avoid an IRS audit. Our professionals will be here to help you avoid an audit and help guide you through it if you are. So, contact us today at (317) 386-7021, and let’s ensure you’re all set!