The IRS is something that no one wants to play around with, especially businesses. Companies tax returns they filed up to three years ago can be audited and any back taxes that are owed for up to 10 years can be collected. Of all the audits performed by the IRS they fall into three categories, mail, office and field. Whether you get information in the mail, get called into the office or someone comes to visit you, there is no doubt that it can make your heart race and cause stress. Using experienced qualified tax and audit services can help ease your mind and help you audit go smoothly, but there are some things that you can do to avoid the whole audit process altogether. Read below for some tips to help you avoid a business audit.
Late Filing
Filing your taxes late after one year may not be a problem. The problem arises when you file late year after year after year. Multiple years of late filing is going to raise red flags and can cause the IRS to audit you. Reputable tax and audit services can ensure that you are filing when you are supposed to to keep you from getting audited.
Salary Caps
While no employee wants to even consider the thought of a salary cap, the fact is that they are important. They are even more important when you consider that an unreasonably high salary can lead to the IRS asking questions which could eventually lead to an audit. Proper records detailing employee salaries are important to justify salaries and a cpa firm can help you with this. Keeping accurate records and avoiding paying questionably high salaries can help you avoid any red flags.
Deductions
Deductions are important for businesses, everyone knows this, but you have to be careful with them. Unusually high deductions or deductions that are out of the norm can easily raise some flat and make some people start asking questions. Keep your deductions to a minimum with the most commonly used deductions to avoid any potential problems. Experienced tax and audit services can help you determine proper deductions to avoid any red flags and audit risks.
Charity
Donations made to charity can help off set taxes, and these are helpful, but you must still be careful when utilizing them. Unusually large donations can easily raise flags and cause an audit to begin. A good rule of thumb is to make the same donations each year to charities. This keeps the records the same and reduces questions. If you choose to make a larger donation to a different charity work closely with tax and audit services to help lower your chances of getting audited.
Use these tips and work closely with your tax and audit services consultant to avoid audits and make them go smoothly if you do end up getting audited. A quality consultant will understand your business thoroughly to help out in the event of an audit. These services are necessary and beneficial for any business large or small.
