There is no more stressful time of the year for businesses than tax time. It is important that businesses get everything right, or they could find themselves in trouble with the Internal Revenue Service (IRS). Typically, the goal is to avoid having to suffer through an audit by the IRS, and there are things that businesses can do when they submit their taxes to reduce the potential for an audit.
Top Actions to Take to Reduce the Chances of Having Your Business Audited
Filing business taxes is something that you have to do every year, and getting things right is necessary. Because of the complexity that goes along with business tax law, it is usually best to work with a tax professional because the IRS requires detailed documentation and information about the finances of your company. Mistakes and errors can be picked up by the IRS and trigger an audit.
But what are the best tips to minimize an IRS tax audit of your company? The following could be helpful in keeping you on track and in the good graces of the tax collection agency:
- Take your time to ensure everything is done in an orderly fashion and neatly. The IRS may have questions about haphazard and messy returns.
- Pay attention to the details and keep meticulous and accurate records so that if there are any questions, you know exactly where to go to quickly respond.
- Put time and effort into your taxes and don’t fudge numbers, estimate them, or cut corners. Doing so can make your returns look inconsistent with your actual numbers and be a reason for an IRS agent to question your returns.
- Be clear about what your expenses are. Classifying deductions in terms that are vague may be the reason for an agent to have concerns.
- Make your tax payments on time and get your employees and contractors their tax forms on schedule.
- If you are doing your taxes without a professional, it is best to make use of one of the many different software options that can help the process along and then file your returns electronically.
- Getting your taxes back to the IRS by the deadline is a good idea, but if you need an extension, make it a priority to file for one so you can stay on track.
- Be careful with your deductions. If you are deducting close to or more than you are earning, this could be a red flag.
- Understand the difference between what costs can be immediately deducted and those that cannot but rather need to be depreciated.
- Do not deduct personal expenses unrelated to your business operations.
Speak with an Attorney at Leiva Law Firm Today
The seasoned and experienced Los Angeles business attorneys at the Leiva Law Firm are dedicated to helping businesses be successful and providing them with useful resources and legal guidance. If you have a question that requires the assistance of a business lawyer in California, please call the Leiva Law Firm to schedule a free consultation at (818) 519-4465.