After many years of low examination fees, there has been an announcement by the Internal Revenue Service (IRS) to increase small business audits by fifty percent. This news making headline in a time when complicated tax law modifications & economic spur programs with regards to Covid-19 have made businesses’ books even more complex than normal.
The ICPAS (Illinois CPA Society) warns this may result in audits & prosecution action against businesses ranging from a long-established family-run operation to several online businesses introduced as the epidemic continues.
With the Internal Revenue Service planning to appoint more dedicated auditors to start reinforcing its prosecution efforts by February 2021, Illinois CPA Society provides the below listed tips to protect your business interests and avoid an audit:
Keep your records clear: Honestly & accurately reporting all income, deductions, expenses, credits and other figures can help in keeping any audit at bay. Making certain you’ve sufficient document to support the figures reported on your business’ information return will make your individual tax return less probable to have mistakes or be audited.
Check your deductions: Unfamiliar listed deductions raise red flags for auditors. If your small business is making you to look for unique deductions to report business losses, seek the assistance of a small business accountant to guide you through, since reporting losses for 3 or more years could augment your risk of a scrutiny into if your business as in operation.
Make quarterly estimated tax payments: If you expect owning over $500 in taxes for your business entity all through the year, you must be making quarterly estimated tax payments. In the event you fail to make these payments you will increase your risk of an audit or penalties.
Provided the complications of new tax regulations & audit procedure, seeking the assistance of a Small Business Accountant Scottsdale might be your best business decision this year. A CPA is well-experienced and knowledgeable to assist small businesses prepare for what is ahead.
Here at Foster Financial CPA, we offer all-inclusive accounting services in Phoenix and the surrounding areas. We employ the latest technology to deliver convenient accounting services to small businesses throughout Phoenix. Feel free to schedule a consultation with us!
Tax Tips for the Self-Employed – Foster Financial
Analyzing the Cost vs. Benefits of Business Expenses
Strategies for Optimizing Your Investments