Even Smart Business Owners Get Audited!

We’re talking audits this month, over at the USTaxAid Coaching Program. Did you know that the IRS has hired a massive number of new auditors? And did you know that the IRS has been quietly writing dozens of new ATGs (Audit Technique Guides)? In case the term ATG is unfamiliar to you, this is a book prepared by the IRS that teaches auditors how to conduct audits for various types of businesses. For example, there’s an ATG for real estate investors, for example, and one for retailers, manufacturers, and so on.

It’s not hard to see where we’re going with this. More audits. But some groups are going to feel the pain much more than others. That’s especially true for those of you who are still running your business through a Schedule C.

The IRS’s own statistics show that your group is going to be audited 10 times more often than other types of businesses, like S Corporations, C Corporations and partnerships.

Does that mean you should make the leap? If you like better asset protection, a lower audit risk, and saving money on your taxes, then yeah – it’s a smart idea.

But if it doesn’t suit you to make the change, then your best defense is to be prepared. That means creating a paperwork system and sticking to it. Missing records, missing receipts – those are all absolute non-starters with the IRS. They’re well aware that Schedule C businesses often operate more loosely than others where tracking and record-keeping are concerned.

Check and double-check your tax return before filing. Boxed software isn’t perfect. It can make mistakes and it has made mistakes — but they’re not the ones who will be audited. Check the math to make sure everything’s added up properly. Or, get a tax preparer to do your return instead. Chances are they may ask more questions and find you more deductions than packaged software can.

By the way, if you’re interested in our coaching sessions, come on over to www.ustaxaid.com and check the schedule. Twice a month Diane and I prepare an audio, an eBook, and a home self-assessment guide, then do a 45-60 minute live call with our coaching members. We talk through the material and how it impacts individuals, answer questions, talk through scenarios … and you get it all for $67/mo, with no long-term commitments.