Many business owners are concerned that they may be the target of an IRS audit. By taking the proper steps throughout the year and especially at tax time, you can rest assured that if your business tax return in Brooklyn is chosen for an audit, you will have all of the documentation you need to satisfy the Internal Revenue Service auditors.
The most important step to make is to find a trustworthy tax preparer. Your tax preparer should be in good standing with the IRS. Preparersthat have a reputation for claiming inappropriate deductions are more likely to have tax returns that they prepare audited. After you have selected a tax preparation professional, be sure to provide them with all of the documents and receipts they need to accurately prepare your return.
If you use independent contractors, document their activities carefully. Businesses that send out more 1099 forms than they send to the IRS in payroll taxes may be scrutinized more closely than businesses that send in their quarterly payroll taxes on time. Using independent contractors is acceptable but you may be asked to prove that they qualify as contractors and are not actually employees of your company.
The IRS expects your expenses to fall within a reasonable range for a business with your revenue. If you plan to claim expenses that may exceed those of other similar companies, be sure you have the documentation to prove them. Your tax preparer may help you determine if claiming a particular expense will be seen by the IRS as unreasonable.
There are certain records that you need to keep in case you are audited. Most of the records related to your business activities should be retained for six years. Though the IRS has a three-year audit rule, they can audit your business tax returns in Brooklyn for six years if it is determined that your income was underreported or that you committed fraud when you filed your return.
GJM Business Center offers tax preparation and tax planning services to help business owners avoid an IRS audit or to be prepared for one if they are contacted with a request for information.
