CHERRY HILL, N.J., Jan. 25 /PRNewswire/ -- Small business owners, perhaps the busiest people in America, juggle multiple tasks to keep their businesses up and running. Yet they may have another worry looming on the horizon -- an IRS Audit.
With historic federal deficits, government bailouts and pressure close a $350 billion tax gap, government is looking to capture outstanding monies owed from one of its biggest sources of uncollected taxes – small businesses.
According to The Alloy Silverstein Group, a full service accounting firm with offices located in Cherry Hill and Hammonton, New Jersey, knowing and understanding what the IRS looks for can help you to decrease your chances of an audit.
The biggest red flag businesses can wave is disguising funds spent for personal purposes rather than payment for legitimate business items.
Along these same lines, avoid the "Miscellaneous Expense" category. Itemize exactly. If a miscellaneous category is necessary, document it.
You also need to correctly determine if your independent contractors should actually be listed as such and not as employees as you could be liable for back payroll taxes, penalties and interests.
Business and personal accounts are to be kept separate at all times.
And, of course, the hot button is unpaid payroll taxes, regardless if you are a sole proprietor, partnership or corporation.
According to Ren Cicalese, shareholder and officer of The Alloy Silverstein Group, "It is an asset to every business to make sure its tax filings are prepared by licensed professionals. Businesses need sound advice when dealing with intricate tax laws they may not understand or be aware of." The Treasury Inspector General for Tax Administration recently found that only 39 percent of returns prepared by unlicensed tax preparers were correct. www.alloysilverstein.com
SOURCE The Alloy Silverstein Group