15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

How to Avoid Getting Audited

Many small businesses worry that the IRS is going to contact them for an audit. While an audit does not mean your business is in trouble, it could put your business at risk. Therefore, it is important to work with Los Angeles accounting firms to avoid an audit. The following are a few ways to decrease the likelihood of an audit.

Deduct Business Related Expenses Only

When Los Angeles accounting firms deduct expenses on your tax return, the costs should relate to business expenses. If you deduct expenses for hobbies, this might look suspicious to the IRS. It could be a reason for them to contact you and perform an audit. They might want to ensure that the expenses are valid. To avoid this, make sure to only deduct expenses that pertain to business costs.

Incorporate Your Business

Another way to avoid a possible audit from the IRS is to incorporate. Statistics indicate that companies that are incorporated are less likely to be scrutinized by the government. However, those who are self-employed have a much higher chance of an audit. In addition, if the tax return is non-complaint, there is a good chance that a sole proprietor will receive an audit. The possibility of an audit is dramatically lower when a business is incorporated.

Make Less

In general, the more you make, the higher chance you have of an audit. Therefore, if you want to avoid a meeting with the IRS, you can simply decrease the amount of money you are bringing in.

Report All Income

When you are reporting your income, it is important to include everything you made during the last year. If you hold something back in an effort to make your income look lower, you could get audited.

Although there is not a for sure way to avoid getting audited, these suggestions can minimize the likelihood that the IRS will be at your door in the near future. Take your time when you file your taxes, and contact Los Angeles accounting firms if you need help.