The prospect of getting audited by the IRS is one of the most stressful parts of being a small business owner. But the truth is, there are some simple things that you can do to avoid audits, and audits themselves may not be as scary as you thought they were.
A recent CNBC report helped to identify IRS red flags. They actually don’t apply to many businesses. And if your business makes less than $10 million a year you have less than a one percent chance of getting the kind of full-on, agent-in-your-face audit that most small business owners fear.
“If the IRS is coming to you, they think there’s something there, and you’ve got some explaining to do,” said Daily. But such field audits are rare: the suspected fraud must be substantial enough to justify the expense of sending an agent to your place of business to review those past years’ returns. “The most common audit nowadays is the correspondence audit,” he said. “It’s really more of an edit correction.” Then, the IRS asks you to mail in more documentation—or even just sends an invoice for tax and fees owed after auditors discover a mistake (say, math errors, or a missed 1099 for a small amount) and recalculate the return. “There should be no problem if in fact the documentation exists and you have it to send,” said Daily.
–CNBC
Of course, none of this is a good reason for trying to tackle your business for yourself, especially if your deductions are complicated or subject to special rules. One sure-fire way to eliminate audit stress is to get expert help with your tax return.
The tax deadline is coming up fast. Contact SMB’s Shared Accounting Teams today if you are interested in securing tax help for your business.