No one likes to think about being audited by the IRS. If you’re a small business owner and have concerns about the possibility of being chosen for an audit, take a deep breath and read on. Being aware of what triggers an audit enables you to be proactive. Here’s how to avoid a tax audit for your small business.
Things that Could Trigger an Audit
Several things can trigger a tax audit for a small business. You can control many of these if you make yourself aware of what is most beneficial, or conversely, what can be detrimental to your business. Some of the most common triggers include:
- Reporting a large loss on your tax return
- Claiming lots of deductions or credits
- Making lots of changes to your tax return from the previous year
- Filing your return late
- A history of tax problems
If any or all of these issues plague your tax return, it increases the chances of an audit from the IRS. You need a solid plan to avoid these triggers and prevent a future audit. With the advice of your CPA, you can determine how much of a loss, if any, to report each year, as well as being sure that deductions or credits you are claiming are legitimate business expenses that won’t cause the IRS to take a closer look. Keeping good records and receipts for all business-related expenses and transactions throughout the year will help you determine what can and cannot be deducted on your return.
Filing on time is always a good idea, of course, and unless there has been a massive change in your business from the year before, it’s best to keep your return as close to the previous year’s reporting as possible.
How Myrick Can Help if Your Small Business is Audited
If the IRS audits you, having an experienced tax professional on your side is critical. Myrick CPA can help you through the entire audit process, from start to finish. We'll work with you to gather all the necessary documentation and prepare a response to the IRS audit findings. We'll also represent you at any audit hearings.
Myrick Client Care Services Plan
Myrick CPA offers a Client Care Services Plan that will keep the chance of an audit to a minimum; but if you do receive a letter from the IRS, or are ever audited, this plan will save you both time and money. The plan includes the following:
- Tax preparation and planning services
- Audit representation
- IRS notice response
- Tax lien release assistance
- Installment agreement assistance
- Collection due process hearing representation
- Offer in compromise preparation and negotiation
- State and local tax representation
The Myrick Client Care Services Plan is a valuable resource for small business owners who want to protect themselves from the IRS.
Here’s a checklist that summarizes the proactive steps we recommend to help you avoid a tax audit:
- Keep good records. The IRS will be more likely to audit you if you don't have good records to support your tax return. Therefore, keep all your business income, expense receipts, and other documentation related to your taxes.
- File your return on time. Your odds of being tagged for an audit increase if you file your return late. Make sure to file your return by the deadline each year.
- Don't make any major changes to your tax return. The IRS may take notice if you have significant changes from your previous year's tax return. Try to keep your return consistent from year to year.
- Get professional help. If you're unsure about something on your tax return, it's always best to get professional help. A tax professional can help you make sure that your return is accurate and complete.
- Consider enrolling in Myrick's Client Care Services Plan If you choose to enroll, this plan can provide you with peace of mind throughout the tax season and the entire year, knowing that we always have your back in the event of an audit.
Here at Myrick CPA, we can handle all your tax needs now and in the future. Contact Myrick CPA and let us know how we can help you.
