Avoid an Audit – Some simple steps

After filing this tax season, audit notification letters to some of us may add injury to an already taxing experience. This article references 5 tips to prevent unwanted attention from your favorite auditing agency.

Topping off the list is -simply put- making too much money. So how can you continue to earn like the mogul that you are, but still reduce the likelihood you will show up on the target list for an audit?

One way for small businesses to avoid unnecessary scrutiny is by going out and filing for a Federal Employer Identification number (FEIN). While a FEIN is not required by law unless you are making payments to W2 employees, by reporting excessive amounts of income on a social security number, you could make the income stand out as extreme for an individual and potentially warrant an audit. Obtaining this item is especially important for small businesses or Independent Contractors who will make payments to subcontractors.

Stay Organized. Accountants claim that small businesses are known for being sloppy record keepers. If and when an audit does occur, having your records in order will save headache and potentially additional scrutiny. This article discusses the importance for finding the correct preparer and the assistance they should provide you with in the case an error or audit does occur.

How can you save money without cutting corners? In honor of St. Patrick’s Day, one of my favorite tax blogs has provided 17 ways to save some green when filing your taxes this year.

Happy Filing!