Protect your small business from an IRS audit.

Kathy and Larry are both members of the Professional Association of Small Business Accountants (PASBA)  The following is a re-print of their article. 

You can access more of their articles at smallbizaccountants.com

 

Protect Your Small Business from an IRS Audit

Published on : Sep 01 2011

Small businesses often find themselves being targeted for audit by the Internal Revenue Service (IRS) for a variety of reasons. For all small businesses, proper record keeping and tax preparation is imperative to not raising the concerns of the IRS. While hiring qualified accounting and bookkeeping services to assist you in passing under the auditing radar can save you time and headaches, there are certain measures you as a small business owner should keep in mind when tax season rears its head.

If you have decided to do your own bookkeeping you should be prepared to preserve meticulous records of all of your financial dealings. This includes retaining all receipts, ledgers of income and expenditures, and donations among others. Not only does this attention to detail help you fill out your tax forms with accurate information, it also provides you with hard copies to confirm the correctness of your data in case the IRS should find issue with your original tax filing.

Go over your bookkeeping and taxes multiple times when filling out your tax forms. Simple mathematical mistakes and wrong entries are a common cause of peaked interest at the IRS. Anything that does not add up correctly will could draw the attention of the IRS and potentially cause an audit. When you hire a professional accounting person from PASBA, you won’t have to worry about troublesome issues like taxes.

Your small business may also be part of a target group for which the IRS would like to take a closer look. These target groups can vary over time, but currently the IRS has been keeping a closer eye on the financials of the small business crowd with annual incomes of 1 million to 25 million. If you are a company within these parameters, it would be wise to hire a bookkeeping firm to assist you in keeping your fiscal matters in order so you can be fully prepared for potentially being targeted for an audit.

Hiring an inexperienced person to do your taxes can lead to an audit of your small business. Recently the IRS has announced that they will crack down on poor tax preparation. They intend to make certification and continued education the norm in tax preparation. This means that the IRS has its eyes on tax preparers to give close scrutiny to any that seem unfit. Expect your taxes to be more closely watched if your tax preparer has made mistakes in the past. At PASBA, we help you carefully select reputable small business accounting services to prepare your tax return to avoid any negative issues.

While only about one percent of tax filers receive an audit each year, it can be a scary and unpleasant experience. Your chances of being audited can be lowered or even all together avoided if you hire a certified small business accountant to handle all your business financials. To locate a Certified Public Accountant (CPA), you can enter your business address zip code on the Professional Association of Small Business Accountants (PASBA) website and narrow down qualified accountants within a specified radius. That makes it easy to locate the best accountant or tax preparer for your business.