Businesses Can Avoid Being Audited

Tax law allows the Internal Revenue Service to audit a business if it feels that there is a mistake with a tax return. However, according to Inman, audits are on the decline. IRS statistics showed that the rate for small corporation to be audited was 0.95 percent, whereas this number jumped to 15.84 percent with corporations that have more than $10 million in assets.

AuditedNo matter the size of a business, it would be wise for owners to take the necessary steps to avoid an audit. The following are a few simple steps that can be taken to prevent this from happening:

– Know what is being filed: The last thing a business owner should be doing when filing his or her taxes is to not understand tax laws, according to Intuit. It is important to know all the deductions that can be used, and exactly how to file taxes, as even the slightest error could lead to an audit.

– Double check everything: No matter how many times someone has filed taxes for their business, there is always the risk that they make a mistake. For this reason, even the most experienced business owners should double check their taxes. It is probably a good idea to triple check as well, as the extra work put in before filing can help avoid a stressful audit in the future.

– Keep tax documents for seven years: In certain situations, there is nothing a business can do to prevent an audit. That said, it is important to have the necessary information on file to prevent it from being a bad situation for the company. Intuit recommended having tax documentation for seven years, as the IRS generally reviews previous returns during an audit.

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James F. McDonough, Jr. concentrates on wealth preservation and estate planning for high net worth individuals, closely held business matters and ownership succession, estate administration and income tax planning. He worked for three years for the public accounting firm, then known as Touche Ross, where he obtained his license as a Certified Public Accountant in 1983. In 1984, he was employed as a tax attorney by Union Camp Corporation where he engaged in planning for corporate income deferred compensation, qualified plan and tax-free exchanges. In 1986, Mr. McDonough was employed as Tax Manager for Monroe Systems For Business, Inc. Thereafter, he was employed as a tax attorney for five years where he engaged in corporate and estate tax planning and estate administration and litigation. For more information, please visit James McDonough's full biography at Scarinci Hollenbeck

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