Doing business is no easy deal and while mostly people fret about the obvious challenges or complexities of business, there is much more to a business than just that. The best of businesses can even have long dry spells during which it may be hard for the IRS to believe that you are running a business in real. And if in some way the IRS is not convinced that you are running a real business then you won’t get the tax benefits which are provided only when the IRS believes that the business is actually trying to turn a profit.
According to specialist tax prepare Susan Rachele , it is in these cases that the IRS decides to carry out an audit on one’s business and though this might become a risk for the business but also this is the only option for a business person at the given situation. So at this instant one’s best bet is to always prepare one’s business for the audit which is about to take place.
Here are the preparatory steps or factors one should look through before an audit held by the IRS:
- The first step is to get a business calendar for your company. A business calendar is that one thing which shows that your business is not static. And by pointing or marking the vital dates on the calendar you can very well show to IRS that your business is progressing. Also more importantly, marking the milestones on your scheduler or calendar shows that your business is trying its best to get profits.
- As per Susie Rachele , perhaps the key step to show that your business is for real is by maintaining records right to the core of your business’s functionality. It is important to see that your business record does not go around any minute necessary details, howsoever small or tiny it is. Therefore the best way is to track each and every expense with the highest detailing to it. And even if you are spending on factors such as entertainment purposes or a dinner, be very precise in your approach so as to make sure to point down which client you are entertaining with these. And it even helps when you mention the reason behind dining with the client and of course the place of dining and the amount of money spent.
- As you may have often heard from your tax preparer that you should always keep your business and personal accounts separate so as to avoid any confusions and also keeping your personal life safe, sound and aside in this way. This is because if there is such a case that some mishap surfaces with your business, and then also you won’t have to fret about it posing any problem with your personal property and life.
Hence, now you need not have to worry about an audit even anymore. All you need is to follow the above steps and for even better results it is best to hire a tax preparer or an adviser.