Getting audited by officials of the IRS is one of the deadliest nightmares for business owners. They may check all your financial books, transactions, and other details of the business. It is not possible to stop them once they start auditing. A good CPA in Nashville, TN is licensed to defend the company for which he works. That’s why, you should always have a CPA with you if you want to avoid these situations. He not only handles auditing but also prevents it. He can perform various other tasks in the office and make your life easier.
How to avoid audits
You should follow certain steps if you want to avoid these audits. Some of them have been elaborated on below:
Check all your receipts and numbers
The tax department will report every transaction and number to the IRS. If there is any discrepancy, they can make things impossible for you. That’s why, it is suggested to check all your numbers and recipes before filing your taxes. A CPA can perform these duties well and help avoid auditing.
Don’t show losses every year
Most business owners tend to report to the tax department that their businesses have suffered losses. This information is shared with the IRS and if it is happening every year, the chances of getting audited are higher. They may disallow all your tax deductions. Hence, you must take such a step after consulting with a CPA.
Streamline your financial data
One of the best ways to avoid auditing is to keep all your financial statements organized. You should report the income and expenses properly and accurately. A good CPA can help you maintain financial data in the most organized manner. If you overstate your expenses and hide your income, you are likely to face the IRS.
Don’t hire more independent contractors
It has been observed that many businesses like to hire more independent contractors to save payroll taxes. If this is the case, the IRS may audit your company and verify the business needs. It is suggested to follow all the guidelines of the IRS to hire independent contractors and employees. You should have a CPA to check these regulations and follow them properly to avoid audits.
Don’t overpay your employees
When paying your employees, you must pay them within the salary range as per state laws.
In all these scenarios, a CPA can help a company to follow all guidelines.
