Are You Facing An I.r.s. Tax Audit?
Business
Business An audit can be one of the most feared events of a business' or individual's life. One of the biggest and most commonly audited items by the IRS for individuals in their own business, and employees of companies who use their own car in business, is the tax deduction for business transportation. A very common reason people get audited is when they try to take deductions for exceptionally large expenses, or expenses that they cannot provide receipts for, such as the use of a personal car for business purposes.
For starters, as a small business owner, you're four times more likely to be audited than the average person. With small business audits on the rise, it is more important than ever to know what triggers an audit, how to avoid being audited and what to do if the IRS is after you. And then if you're audited, you're going to have to prove those numbers.
Conclusion
A tax audit is nothing more than the IRS requesting substantiation for the numbers on your return. And one of the best ways to prepare for a tax audit is to have your tax returns prepared by an outstanding tax practitioner. The number ONE red flag in triggering a tax audit is claiming false business expenses. The other red flag is mixing your personal expenses with your business expenses. You can avoid this flag if you set up your business entity correctly using a simple structure such as an LLC, partnership, or S-Corporation. If you start you business out on the right path from the beginning, you will greatly reduce your chances of an audit.
The other advantage of setting up your business structure correctly, besides avoiding an IRS audit, is that you can start building your business credit profile. When you get your business creditworthy then you wont need to use your personal paycheck to fund your daily business expenses. Thus you can keep the separation between the business and personal which is a major key to avoiding a tax audit.
There is a new eBook on the market that explains the basics of business structures, including the tax advantages and disadvantages of each, as well as the basics of building your credit profile so that your company can start getting business lines of credit, business loans, and business credit cards. Visit the website today to learn about the eBook Basics of Business Credit. A Free Credit Restoration Guide is being given as a bonus with every purchase. To learn more, click here.
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