When you’re starting your small business, you might vow that you will do everything possible to prevent getting audited. Using payroll or accounting software can help keep you organized, but certain things can still trigger an IRS audit. What are IRS audit triggers, and how can you avoid them?
IRS audit triggers
It’s football season! You know what that means … time to eat chips and dip while you watch your team (hopefully) dominate and grab the win. When watching football, you know what play your team needs to pull off a touchdown.
Staying away from IRS audit triggers is like a football playbook. What does your small business need to do to score and be successful? One way you can focus on the success of your business is to steer clear of an IRS tax audit. Audits cost you time and money, which sets back business operations.
Take a look at our infographic below for some common small business IRS triggers and the plays to avoid them.
Your IRS audit avoidance playbook
In this infographic, your small business, the Business Bears, needs to stick to the play to avoid getting thrown into IRS audit territory. Know the play like the back of your hand to make it to the end zone and away from an IRS audit. Avoiding an IRS audit will let you focus on growing your business.
IRS audit triggers are the opposing team, the Trigger Tigers. The Trigger Tigers have eight key players to look out for. These players determine who gets audited. If you come across these triggers without knowing how to avoid them, you could be pushed into an IRS audit. Need a closer look at what to avoid?
Trigger Tigers
- Missed tax deadlines
- Claiming too many business expenses
- Claiming 100% business purposes on a vehicle
- Incorrect claims for home office small business tax deductions
- Errors on your tax return
- Use the economic realities test to determine worker classification
- Too many claims for small business charitable donations
- Only accepting cash payments at your business
Why avoid an IRS audit?
Even though an audit will not necessarily prevent your small business from reaching success, you might face penalties if there are discrepancies between your records and reports. And, you will always spend time and money preparing for an audit.
Want to learn more?
For a more detailed guide of IRS triggers and ways to avoid them, check out our free guide: “8 Things That Trigger an IRS Audit and How to Avoid Them.” In the guide, you will find eight small business audit triggers that alert the IRS they should examine your books. And, you will learn how you can avoid these triggers. Get your business on its way to success without taking time out to deal with audits.
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This is not intended as legal advice; for more information, please click here.