Business Owners: Watch Out for These Actions (Possible IRS Audit Triggers)
As a business owner, you likely have MANY responsibilities you have to attend to every day. Whether you are balancing your payroll, bookkeeping, or managing accounts receivable, our accountants in Mid-Missouri are here for you! Our Central Missouri accounting firms have a passion for helping small businesses grow and thrive. Part of that is being aware of what is going on in your business and knowing what to watch for. Wilson Toellner CPA is here to give you a few examples of actions to watch for within your business that could trigger an audit from the IRS.
An employee who is making an ABNORMALLY large donation to a charity.
If you make a donation to a charity from your business that is larger than normal, you may draw attention from the IRS.
A home-based business deducting too many expenses.
In today's day and age of technology, many businesses can operate out of their homes.
If you find deducting your home office costs difficult on your own, see a tax consultant in Mid-Missouri first.
Someone within your company who is paying themselves an abnormally HIGH salary.
There are people who will try to get away with paying themselves too much.
An employee who is making MANY cash-only transactions.
Businesses that have mostly cash-only transactions can draw the attention of the IRS because it's harder to verify income that way. It can also be seen as suspected to make large cash transactions, such as purchasing a company vehicle, business equipment, or property.
All of us here at our accounting firms in Central Missouri hope you found this blog enlightening. As we have said before, we have a passion for helping small businesses grow and thrive. Because today’s business climate changes so quickly, there is a clear need for business owners to have more than just backward-looking financial statements. Often, business owners need up-to-the-minute data to make decisions and to capitalize on opportunities—but they lack the resources on their team to produce such data. This is where our accounting professionals in Mid-Missouri come in. Give us a call today to see how we can help you and your business thrive.
An employee who is making an ABNORMALLY large donation to a charity.
If you make a donation to a charity from your business that is larger than normal, you may draw attention from the IRS.
A home-based business deducting too many expenses.
In today's day and age of technology, many businesses can operate out of their homes.
- Just be careful when making the home office deduction.
- Deducting too many expenses when compared to your gross income can draw suspicion from the IRS.
- Also, be sure when claiming your in-home space you use the "percentage of use" method based on the type of business you have.
If you find deducting your home office costs difficult on your own, see a tax consultant in Mid-Missouri first.
Someone within your company who is paying themselves an abnormally HIGH salary.
There are people who will try to get away with paying themselves too much.
- For example, a business owner, making up a "fake employee" and claiming that "fake employee's" paycheck. Something like this could absolutely trigger an IRS audit.
- Also, according to Kiplinger, IRS statistics for 2016 show that people with a yearly income of $200,000 or higher had an audit rate of 1.70% or one out of every 59 returns. The audit rate drops greatly for filers making less than $200,000.
An employee who is making MANY cash-only transactions.
Businesses that have mostly cash-only transactions can draw the attention of the IRS because it's harder to verify income that way. It can also be seen as suspected to make large cash transactions, such as purchasing a company vehicle, business equipment, or property.
Business Owners, Wilson Toellner CPA is Here to Assist You!
All of us here at our accounting firms in Central Missouri hope you found this blog enlightening. As we have said before, we have a passion for helping small businesses grow and thrive. Because today’s business climate changes so quickly, there is a clear need for business owners to have more than just backward-looking financial statements. Often, business owners need up-to-the-minute data to make decisions and to capitalize on opportunities—but they lack the resources on their team to produce such data. This is where our accounting professionals in Mid-Missouri come in. Give us a call today to see how we can help you and your business thrive.
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