Running a small business has its complexities at any time of the year. However, during tax season, you and other Georgia business owners may have a lot on your mind, especially if you have not handled business taxes before. Fortunately, if you have your records in order, you can review your information and prepare for any possible questions.
During your preparations, you may want to remember that being audited by the IRS is a possibility. However, even if you receive a notice, it is not necessarily cause for panic. Many audits are simply a request for more information or to clear up a mistake on returns and related tax documents.
Is your business at risk of facing an audit?
There are some issues that could raise red flags with the IRS and make a business more likely to face an audit. Some of those issues that the agency is constantly on the watch for include the following:
- A business that reports considerable expenses
- A business that claims a substantial number of losses
- A business owner who earns a significant income, such as $1 million or more
- A business that makes excessive deductions
Of course, it is always necessary to report your business’s gains and losses as they truly happen. Even if you are afraid certain information could set you up for an audit, you should report it accurately. Trying to provide false information, even on something that seems minor, could land you in a great deal more trouble with the IRS and possibly law enforcement.
How can you avoid difficulties?
As you run your business, dealing with taxes is just another thing to add to your list of responsibilities. In addition to ensuring that you file your taxes properly, you also need to make sure that you handle any payroll taxes, sales tax and other related tax matters that could apply to your business operations. There are laws that apply to each of these areas, and gaining information on your obligations under those laws may be wise.
In the event that you have concerns about handling business tax matters on your own, you could consider bringing in outside bookkeepers and other professionals to address those matters for the company. Of course, if you choose to do so, it is important that you have the right employment contracts and other agreements in place as necessary.