By Evan Vitale
Being audited by the Internal Revenue Service has not only been the punchline of many jokes and personal jabs, but it’s also one of those life moments that strikes fear into the hearts of many.
However, should you ever receive notice of an audit, here are a few steps and tips you can take in order to make the process go a little smoother for you:
- The best way to prepare is to have a tax adviser on your side. He or she will not only help you with your questions and concerns, but it’s also the best way to be represented before the IRS. They will know how to find the solutions for your tax audit problems and will be able to respond to any auditor suspicions.
- If you are a small business owner, your professional accountant knows how to reduce your chances of being audited. Want to avoid being audited? Don’t have a careless tax return. Keep personal deductions and business deductions separate. Keep good records of all expenses and be exact. Never round up numbers.
- Sometimes, small businesses are audited because they deal in cash and, thus, money is sometimes not properly reported to the IRS.
In addition, small business owners often claim personal deductions and business deductions. Small business owners should always keep excellent records just in case of a potential tax audit.
Also, sometimes a small business is informed that their deductions were not allowed as the IRS may claim that their “business” is really a “hobby.” If this should happen you may need quality audit representation to review your returns and your deductions.
Should you ever be audited by the IRS, they will verify bank records, deposits, income, expenses, deductions, payroll taxes, employee classifications and other financial records.