James F. McDonough
Of Counsel
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Tax law allows the Internal Revenue Service to audit a business if it feels that there is a mistake with a tax return. However, according to Inman, audits are on the decline. IRS statistics showed that the rate for small corporation to be audited was 0.95 percent, whereas this number jumped to 15.84 percent with corporations that have more than $10 million in assets.
No matter the size of a business, it would be wise for owners to take the necessary steps to avoid an audit. The following are a few simple steps that can be taken to prevent this from happening:
– Know what is being filed: The last thing a business owner should be doing when filing his or her taxes is to not understand tax laws, according to Intuit. It is important to know all the deductions that can be used, and exactly how to file taxes, as even the slightest error could lead to an audit.
– Double check everything: No matter how many times someone has filed taxes for their business, there is always the risk that they make a mistake. For this reason, even the most experienced business owners should double check their taxes. It is probably a good idea to triple check as well, as the extra work put in before filing can help avoid a stressful audit in the future.
– Keep tax documents for seven years: In certain situations, there is nothing a business can do to prevent an audit. That said, it is important to have the necessary information on file to prevent it from being a bad situation for the company. Intuit recommended having tax documentation for seven years, as the IRS generally reviews previous returns during an audit.
- Practices: Tax and Trusts & Estates, Corporate Transactions & Business
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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