A small business audit doesn’t necessarily mean you’ll be dealing with the Internal Revenue Service. Small business owners can conduct internal audits on an annual basis. Either way, the audit process involves looking at accounting records and tax return numbers. The idea is to make sure your financial data is correct, and that it’s in line with tax laws.
What is a Small Business Audit?
This is an examination of small business tax filings and financial records. The idea is to make sure everything is accurate. Accounting books and financial statements get looked at by either external auditors or internal auditors.
Keep in mind you need to report things like a foreign bank account to the IRS.
Why do businesses get audited?
The IRS conducts small business audits for a number of different reasons. Here are a few of the common ways a business owner can find themselves in front of an IRS agent.
- Claiming 100% of business use on a personal vehicle.
- Claiming too many years of business losses in a row.
- Rounding off financial information numbers.
- Other bad financial practices like out of whack deductions.
- A small business income that is higher than the average can trigger an audit notice. However, the odds…
