Is your business being audited by the IRS? Well, you need to prepare yourself for the audit accordingly. Also, you need to know what they might be looking for when they audit your business (see Business Audit in Moreton Bay by SRJWW). Here is what you need to know so that you can prepare yourself for an IRS Audit for your business.
1. Does Your Lifestyle Match Your Reported Income?
An IRS auditor will size up your clothes, jewelry, furnishings and vehicles in your home or office. They will take everything into account to make sure your lifestyle actually matches the income you have been reporting. If you’re reporting less income, you will be in trouble.
2. Does Your Business Deal With A Lot Of Cash?
If you run a business that deals with a lot of cash, you should expect the IRS auditor to assume that there is some skimming involved or you might be taking some cash off the top for your own pocket without any declaration. Therefore, make sure you have all the proper records for your cash business to avoid any disappointments.
3. Do Your Auto Expenses Include Business Only Or Personal Ones Too?
Many people use their business car for their own personal expenses so it’s common for auditors to expect these expenses. However, it’s not a guarantee that they will accept it. However, if you write off the expenses for your car for business only, it will seem quite unbelievable. That’s because it’s hard to assume that you have only used the vehicle for business expenses alone without taking your own trips along the way. If you use your car for both personal and business expenses, you should claim a high percentage of the expenses for the business and make sure you have good records for the best results.
4. Claiming Personal Travel Or Meal Costs As Business Expenses
Meal and travel expenses are quite tricky to claim and most IRS auditors find a lot of errors here. Make sure all the meal deductions and travel expenses are properly documented. You can always bring your family along for a simple business trip. However, you shouldn’t claim your costs while having fun with your family as business expenses because you’re evading tax this way.
5. Have You Forgotten To Report All Your Receipts And Sales?
If there’s a significant business expense that you have failed to report, you need to hire a tax accountant to assess the records and remove yourself from the overall assessment to avoid any inconveniences. If there are too many sales that haven’t been declared, a criminal investigation team will be contacted but if it’s something with a plausible explanation, you can always pay the extra tax once the auditor has assessed the extra tax.
In conclusion, an IRS audit weighs down your business if you have not handled everything correctly. That’s why it’s prudent to have a tax accountant or professional take a good look through all the records to make sure everything is in order before the auditor comes around. Visit https://www.srjww.com.au/ for more information on IRS audits and other accounting needs for your business.