As a small business owner, a tax audit notification from the Internal Revenue Service “IRS” is devastating. If you have never received such a notification, it may be, you are not familiar with the downsides of a tax audit. A tax audit notification means the IRS detected issues with your tax returns. These issues are noted as “red flags” that prompt the IRS to issue a tax return audit. Experts believe most business and individual taxpayers have an “IRS audit phobia.” Of course, there is no evidence to support these claims. But when you think about it, the experts may be correct in saying most taxpayers have a phobia of IRS audits.
Unfortunately, the IRS utilizes a system to select random tax returns for an audit. So, an IRS tax audit notification may have nothing to do with unreported or questionable reported income.
What Are Tax Audit Red Flags?
When tax returns are processed, they are scrutinized carefully by trained experts at IRS. One of the main reasons why IRS audits are implemented is a computer trigger. The IRS has a unique, complex computer system deemed “Discriminate Information Function “DIF.” The DIF system is designed to detect suspicious or peculiar information like duplicate credits and deductions. The anomalies in tax returns may or may not be an oversight or intentional. This is what the IRS wants to determine through a tax audit.
The IRS issued tax audits for only 0.63 percent of all tax returns received in 2018. If you are contemplating a new business adventure, know this information before you จดทะเบียนห้างหุ้นส่วนจำกัด.
Eliminating Tax Audit Red Flag Risks
Just the mere mention of an IRS audit is enough to cause some taxpayers to exhibit high blood pressure, stress, extreme anxiety, and in some cases, depression. Avoiding a tax audit is not always possible, thanks to the IRS random selection process. However, it is possible to minimize the risks of a tax audit by hiring an experienced accountant to prepare your tax returns.
Hire A Professional
Running a small business will prove to be very difficult. You’ll have to satisfy your customers, keep your employees happy, and manage your books. Suffice to say, you’ll have to juggle numerous responsibilities are once. Many people can’t handle it. They’ll become overwhelmed and make many mistakes along the way. Remember that it only takes one small mistake to get audited by the IRS. Since you don’t want this to happen, you should hire a professional. While you focus on satisfying your workers, the accountant will handle your books. They have more experience managing financial records. Therefore, you can guarantee that they’ll get it done correctly and save you a lot of trouble.
If you want to avoid being audited by the IRS, you should hire a professional. Although they’ll charge for their services, it’ll be worth it in the long run.
Keep Copies
You never know when you’re going to get audited by the IRS. While you might not be able to avoid it, you can take steps to defend yourself. You can prove that what you provided was truthful and accurate. It is wise to prepare for a potential audit because you never know when one is going to happen. The best way to prepare is by keeping copies of your receipts. When you pay your workers, you should keep a copy of their paystubs. Keep track of your financial transactions and keep copies. If you’re audited by the IRS, you can use the copies to confirm that your records were accurate.
It is best to keep copies for three or more years since an IRS audit will usually go back three years.
Conclusion
Ultimately, all businesses should hire an accountant because doing so will make tax time much easier. Plus, it will reduce the likelihood that you’re going to run into issues with the Internal Revenue Service. Do your research to ensure that you can hire the best accountant for your business. Achieve this goal to give yourself peace of mind. In addition to this, you should be ready for an IRS audit because you never know when one is coming. Keep copies of your records for at least three years to avoid potential problems. Finally, remember that your professional accountant will help you during this difficult time.