Small Business and Tax Audits: 4 Tips to Reduce Your Risk
Running a small business is not an easy task. Business owners have full schedules-schedules that rarely include much downtime. Getting notification of a tax audit to add to the daily to-do-list can make an already full schedule seem unmanageable.
Thankfully, there are some proactive steps you can take to reduce the risk of a small business tax audit, including:
- File on time. Filing your taxes late can prompt the IRS to take a closer look at your tax returns. Avoid this increased scrutiny by getting your tax filings complete and sent in before the deadline.
- Take deductions wisely. The IRS is skeptical about excessive deductions. Small businesses have multiple opportunities to take tax deductions. Although taxpayers should take as many deductions as they can, they should also be prepared to back up these claims with the necessary paperwork.
- Double check your numbers. A mathematical error can result in easily avoidable scrutiny. Double and even triple check your numbers befor sending in your tax filings.
- Do not overuse a business vehicle. Business vehicle deductions are valuable benefit. However, a 100% depreciation deduction will get the attention of the IRS. If this is an accurate claim, keep the paperwork handy to back it up.
Unfortunately, even when these steps are taken, tax audits can happen. Business owners can help better manage the audit by delegating the process to a legal professional. An attorney experienced in these matters can represent your interests and better ensure a more favorable result.
If you have tax questions or concerns, call Frost Law today at 410-497-5947.