With the IRS planning to increase tax audits by 50% this year, your small business could be targeted. An audit only happens when the IRS is suspicious that your tax forms aren’t accurate or truthful. Therefore, it’s important to take many precautions during the tax preparation process before you file.
When it comes to filing your taxes, the numbers are the golden ticket to avoiding an audit. It’s important to double-check your math and all of the numbers you are providing. If the IRS finds anything that doesn’t add up or make sense they will take action to ask you about it. Another tip before you finalize your totals: never round up. Having all numbers that end in 5 or 0 are red flags.
Always file your taxes on time:
Audits can sometimes be a result of filing late tax returns so make it your mission to stay on top of the tax filing deadline and have all of your ducks in a row by then. Not only should it be submitted on-time but also fully completed. Double and even triple-check that you’ve provided all of the necessary information the IRS needs. If you need more time to complete your taxes, you can file for an extension.
Report all income:
Income is obviously a crucial part of the business tax preparation process. Keep in mind, your reported income should exceed the amount you have reported on your 1099 form. If not, the IRS will most likely look into you further for an audit. This goes hand in hand with keeping proper records of all income and taxable items organized and up to date. Taxes should be top of mind during the year in order to help you when tax season finally comes around.
Consult with a tax professional:
Filing your taxes is more than just filling in the blanks and adding numbers. As a small business owner, your money and company are on the line when it comes to tax preparation and planning. To avoid an audit, it would be in your best interest to consult a tax professional to confirm your numbers and review your forms to make sure you’ve accounted for everything you’re entitled to when it comes to business tax deductions.
That’s where we come in!
Whether you’re a small business or just looking to learn more about filing your taxes properly, we’re here to help with your tax planning and filing. Feel free to contact our Arnold, Maryland office at 410-224-2600 and don’t forget we’re also offering virtual appointments. Book yours today!