Whether you run a consulting firm with $5 million in annual revenue or a street corner hot dog stand that brings in $20,000 a year, an Internal Revenue Service (IRS) audit of your tax returns has the potential to be one of the most stressful experiences you’ll encounter as the owner or operator of a small business. As a first year business owner, I’ve been very meticulous about keeping track of all expenditures and maintaining organized files in the event of an audit. Fingers crossed, let’s hope I never venture down that path. With proper planning and a clear understanding of what to expect, any new business owner can significantly improve their odds of emerging relatively unscathed..
What the IRS Looks For
IRS auditors are trained to ferret out the truth about your business’s income and tax liabilities. They are likely to scrutinize business practices and search for filing errors to make sure that you have paid every penny you owe. Whether they request a face-to-face meeting or choose to conduct an audit through correspondence, the following areas are likely targets of IRS scrutiny. […]
