No small business owner wants the inconvenience, hassle and stress of an IRS audit. Audits can never be completely avoided because in some cases businesses are randomly selected for an audit. The good news is there are steps you can take to reduce your chances of being flagged for audit due to error. Chron.com recently published a list of red flags that may trigger an audit, so you can learn what to avoid.
Chron.com’s list includes:
- Mis-matched social security or taxpayer identification numbers or names between your return and W-2 or 1099 forms
- Self-employment
- Disproportionate income vs. deductions
- Tip earning
- Hefty write-offs
- Business losses
- Deductions for gifts or entertainment
For the full list of audit triggers and explanations for each, visit Chron.com Small Business.
Have you ever been flagged for an audit, randomly or otherwise?