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Wednesday, August 24, 2016

IRS and Small Business Owners IRS Alert

If you run a small to moderate sized company,
outsourcing options as a means to protect your
investments on the in case of IRS prompted audit.

Many small businesses suffer from the misconception that only big corporations have to worry about exhaustive IRS audits. 

Nothing can be further from the truth.

The Internal Revenue Service utilizes a different set of criteria for evaluating moderate and small businesses, so there are numerous things that can red flag your company for potential governmental scrutiny that are unique to typical mom and pop ventures.

The most common issue  that creates unwarranted suspicion is the filing of numerous tax deductions and exemptions.  Even if such deductions are legitimate, far  too many of them may  give the IRS the impression, mistaken or other wise, that you are playing fast and loose with tax loopholes, shelters and write offs.  To reduce potential risk of an IRS audit in this regard,  you may wish to mitigate the numbers of deductions you indulge, taking due care to keep all receipts  and documents on hand.  This measure may not only keep you from getting audited, but may very well assist in keeping the business in the black should you wind up  being the unwitting participant of  an IRS evaluation.

Another potential problem that may be more specific to smaller and mid sized business is the correspondence audit. 

Moderate sized companies are in greater danger.

Especially this type of review due to the fact that this type of IRS evaluations focus primarily on  red flags that are specific to more diminutive enterprises. In many cases,  this style of audit may not require a face to face meeting and can be disputed in an informal setting.

Another way to keep the tax man at bay is to outsource your major accounting work. Even if you have an in house bookkeeper or a reliable on staff finance team, it is always a good idea to have another pair of eyes evaluating your books. Not only does it guarantee your financial records will be maintained, it allows for pristine record keeping that reduces IRS related inquiry.

Outsourcing may be especially needful if you undergo a correspondence audit and decide to dispute the outcome. 

Even though these kinds of IRS audits are largely handled via snail mail, they can still be costly and problematic to a small company's bottom line when contested.   Companies that routinely outsource with reputable accounting firms will be able to utilize reliable CPA's to represent them in Tax Court. Additionally, the company will be familiar with your company's in house finance paradigm and can utilize this knowledge to assist you in the pursuit of your goals.


Call GBC Income Tax Services today at 678-366-9232 for all your tax and IRS needs!

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