Are you familiar with all IRS tax laws for your small business? There are so many laws, regulations, and filing requirements that you would need a full-time tax attorney on staff just to oversee your IRS tax strategy.
However, there are steps you can take to prevent an IRS audit. Here are three helpful strategies you can use today to keep the IRS away from your door:
1. Use Accounting Software
One way to help your small business keep accurate records is by using accounting software programs. Keep your database updated on a daily basis with all financial transactions. Accounting software not only makes it easier to update financial transactions, but also makes it a breeze to make specific reports and provide a tax preparer with summarized financial information.
2. Keep Business and Personal Records Separate
Many small business owners have a tendency to combine private financial accounts with business accounts. It is always best to have a separate bank account strictly for all business cash and keep separate business accounting records from personal records. Most banks will allow a client to open a business account, or at least a second checking account which you can use strictly for business deposits and checks. Also, all your business accounting transactions should be recorded separately from personal activities either by different books, or by different account databases on computerized software.
3. Use a Licensed Tax Preparer
Better yet, hire a qualified CPA or tax attorney to prepare your business tax returns. The IRS has published that 61 percent of tax returns filed by unlicensed tax preparers contain errors. Why trust your tax returns to someone who merely inputs numbers into a computer tax filing software? You can trust that a CPAs and tax attorneys licensed in your state for tax preparation will ask you the right questions, and make sure you provide the correct documentation for deductions.
Taxes are a sure task for your small business. However, by being smart and taking these steps, and other advice offered by qualified and licensed tax preparers, you can prevent expensive IRS audits and protect your small business from hefty fines.
