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Filing taxes is a headache, even with the best accounting practices. For a small business or home-based business, there’s a greater need to keep very accurate records and track your expenses versus your income. Among the two high risk areas for an audit are self-employment and home office tax deductions.
The IRS believes most self-employed people under report their taxable income and abuse tax deductions. There are far more audits of these types of individuals than there are of those who draw a salary. The same is true for most cash-based incomes including taxi drivers, waiters and waitresses. There are sometimes tests performed to see whether the lifestyle exceeds what they are reporting as their income. There are audit guides for more than 100 different types of businesses available. It’s useful to familiarize yourself with the information in order to see what auditors are looking for.
To get a copy of one of these business guides call: IRS Freedom of Information Act Reading Room at (202) 622-5164, or write Box 795, Ben Franklin Station, Washington, DC 20044.
For more information about Resident agent or Incorporation in Montana visit us at IncPardise.com or call at 888-284-3821.
