January 09, 2013 (Press-News.org) Tips for business owners to avoid tax audits
Many people mistakenly believe that small businesses are less likely than larger companies to be audited by the Internal Revenue Service -- but this is not the case. In fact, the IRS often targets small companies for tax audits. Therefore, it is especially important for small business owners to take steps to protect themselves from the risk of an IRS audit.
Declare all income
As obvious as it may seem, one of the most common mistakes that result in tax audits for small business owners is failing to report their entire income. In many cases, people underreport their income without meaning to -- often as a result of routine accounting errors such as reporting net revenue instead of gross revenue. When errors of this type occur, business owners become more vulnerable to tax audits.
Don't mix business and personal expenses
When running a small business, particularly if it operates out of the home, it can be easy for the line between business and personal expenses to become blurred. However, the IRS keeps a close eye on how business owners draw these expenditures and will audit those who it believes may be reporting them incorrectly. Taking extra care to keep business and personal expenses separate can help prevent a costly and time-consuming tax audit.
To avoid raising red flags that could trigger a tax audit, small business owners should keep separate bank accounts and credit cards that are strictly for business. It is also important to keep detailed records of business income and expenses throughout the year.
Use caution when claiming business tax deductions
Small business owners need to be particularly careful when it comes to claiming tax deductions, because many tax audits occur as a result of deductions that have been claimed incorrectly. When claiming deductions for mixed-use property, such as a vehicle that is used for both business and personal purposes, business owners must take care to deduct only the portion of the expense that actually goes toward running the business.
Deductions for home offices can be even more problematic because the IRS has very specific rules that dictate how and when a home office can be deducted as a business expense. Because many people claim a home office deduction incorrectly, the IRS is on the lookout for violators and is likely to investigate if it suspects the necessary criteria have not been met.
Seek legal help to prevent and defend against audits
When notified of a tax audit, it is wise for small business owners to seek advice from a tax lawyer before moving ahead with the process. An attorney can help business owners prepare thoroughly for the audit to give them the best chance of success, and can work directly with IRS investigators to protect the interests of the business during the audit.
A tax attorney can also help business owners plan ahead by working with them to optimize their tax benefits while minimizing risks of audits. Particularly when restructuring or forming a new business, a knowledgeable tax attorney can be a valuable asset to help business owners avoid common missteps that frequently lead to tax audits.
Article provided by Eno, Martin & Donahue, L.L.P.
Visit us at http://www.ebmdattorneys.com
Tips for Business Owners to Avoid Tax Audits
When running a small business, taking the time to guard against tax audits is a worthwhile investment.
2013-01-09
ELSE PRESS RELEASES FROM THIS DATE:
The Push for Alimony Reform in New Jersey
2013-01-09
The Push for Alimony Reform in New Jersey
In June 2012, the New Jersey Assembly unanimously passed a bill to create a blue-ribbon commission to study the state's alimony laws and give recommendations to the legislature on how to update them. A companion bill is working its way through the New Jersey Senate. Supporters of the measure believe the time has come to modernize the state's alimony system to eliminate what many believe are injustices it causes. Activists are also pushing for more reform to the state's alimony laws.
Commission Proposed to Study Alimony Laws
The ...
Pennsylvania DOT Launches Safety Campaign to Curb Distracted Driving
2013-01-09
Pennsylvania DOT Launches Safety Campaign to Curb Distracted Driving
The act of driving is a more complicated task than many people realize. Driving requires the measurement of the distance of vehicles and objects in front, behind and to the side of the car, and it requires the simultaneous manipulation of the steering wheel and foot pedals to safely travel down the road. It is because driving is so complicated that distracted driving, such as reading a text or eating a burger while behind the wheel, poses such a hazard.
According to the Pennsylvania Department of ...
Property Owners Must Inspect for Hazards
2013-01-09
Property owners must inspect for hazards
Most Connecticut residents probably realize that being an owner or occupant of property carries certain responsibilities. A classic responsibility for homeowners is shoveling their sidewalks in winter so visitors don't slip. The responsibility an owner owes to most visitors to his or her property is called premises liability: the legal responsibility property occupants and owners have for injuries and accidents on their property.
A recent incident in Bridgeport, Connecticut is illustrative of the issue of premises liability. ...
Dog Bite Liability in Connecticut: The Growing Focus on Pit Bulls
2013-01-09
Dog Bite Liability in Connecticut: The Growing Focus on Pit Bulls
Dog bite liability is a concern in Connecticut for more than the mail person. Anyone can be the victim of a dog bite and too often dog bite victims are small children. A dog bite can quickly result in a trip to the emergency room, and a serious dog bite can result in life-threatening injuries. In recent years certain dog breeds, such as pit bulls, have been identified as being more dangerous than other breeds, and the idea is now leading to more legal scrutiny regarding the owners of such breeds. The highest ...
A Brief Overview of Probate in Ohio
2013-01-09
A Brief Overview of Probate in Ohio
When a loved one passes away, it can be hard to transition to addressing the affairs of the estate after remembrance. The administration of a deceased loved one's estate can involve the probate process, which determines how a person's assets are apportioned after death according to his or her will and state law. This article provides a brief overview of the Ohio probate process to help familiarize those who will go through the process.
What is Probate?
Probate is a legal proceeding that administers certain types of assets and ...
Out-of-State DUI Effects on Las Vegas Tourists
2013-01-09
Out-of-state DUI effects on Las Vegas tourists
When most tourists think about Las Vegas, they conjure up images of gambling, spectacular shows, and free food and alcohol. Yet, tourists would be wise to remember that rules don't go out the window once they land in Las Vegas, and that a DUI conviction has harsh penalties in the state of Nevada.
Implications and penalties for an out-of-state DUI
DUI charges occur in every state, regardless of whether the recipient is an in-state or out-of-state resident. Although the legal blood alcohol limit of .08 percent is the ...
Nevada Drug Court Celebrates 20th Anniversary
2013-01-09
Nevada drug court celebrates 20th anniversary
The Nevada court system recently celebrated the 20th anniversary of the establishment of its drug courts. The celebration highlighted the enormous gains made by both the participants in drug court and the state.
20 years of drug court in Nevada
The ceremony was held in October at the Regional Justice Center in Las Vegas. It featured a keynote speech by the Nevada Supreme Court Chief Justice, who stated, that compared to other court programs, the Nevada drug courts boast the highest impact on the criminal justice system, ...
Foreclosure Prevention Law Takes Effect in Massachusetts
2013-01-09
Foreclosure prevention law takes effect in Massachusetts
Last August, Massachusetts Governor Deval Patrick signed a bill that contains certain requirements to give more protection to struggling homeowners. For example, if a loan is considered risky, the lender must offer modifications to the borrower before foreclosure. Also, home mortgage lenders are banned from pursuing foreclosure if they do not have the correct documentation.
The major provision that will help many homeowners requires the lender to determine whether the net value of modifying the loan exceeds ...
Does Homeowners Insurance Cover Fire Damage?
2013-01-09
Does homeowners insurance cover fire damage?
This fall, wildfires in the Wenatchee National Forest to the northeast of Kings County, Washington, caused thousands of acres to burn and threatened hundreds of homes. Unfortunately, some of these succumbed to the blaze, leading to lots of clean-up and rebuilding for homeowners.
Some homeowners may think they must go it alone with covering costs of fire damage. However, most homeowners' insurance policies cover fire and smoke damage and even total destruction from fires. Filing a claim can be complicated, so it is important ...
A Living Will: An Important But Often Overlooked Estate Planning Document
2013-01-09
A living will: an important but often overlooked estate planning document
When most people think of estate planning, they think of preparing a document like a will or perhaps a trust. However, when considering their estate plan, many people fail to plan for the possibility that they may be unable to communicate with their doctors about the care that they wish to receive. It is therefore important that Pennsylvania residents consider including an advance health care declaration among their estate planning documents.
What is an advance health care declaration?
An ...
LAST 30 PRESS RELEASES:
New strategies to enhance chiral optical signals unveiled
Cambridge research uncovers powerful virtual reality treatment for speech anxiety
2025 Gut Microbiota for Health World Summit to spotlight groundbreaking research
International survey finds that support for climate interventions is tied to being hopeful and worried about climate change
Cambridge scientist launches free VR platform that eliminates the fear of public speaking
Open-Source AI matches top proprietary model in solving tough medical cases
Good fences make good neighbors (with carnivores)
NRG Oncology trial supports radiotherapy alone following radical hysterectomy should remain the standard of care for early-stage, intermediate-risk cervical cancer
Introducing our new cohort of AGA Future Leaders
Sharks are dying at alarming rates, mostly due to fishing. Retention bans may help
Engineering excellence: Engineers with ONR ties elected to renowned scientific academy
New CRISPR-based diagnostic test detects pathogens in blood without amplification
Immunotherapy may boost KRAS-targeted therapy in pancreatic cancer
Growing solar: Optimizing agrivoltaic systems for crops and clean energy
Scientists discover how to reactivate cancer’s molecular “kill switch”
YouTube influencers: gaming’s best friend or worst enemy?
uOttawa scientists use light to unlock secret of atoms
NJIT mathematician to help map Earth's last frontier with Navy grant
NASA atmospheric wave-studying mission releases data from first 3,000 orbits
‘Microlightning’ in water droplets may have sparked life on Earth
Smoke from wildland-urban interface fires more deadly than remote wildfires
What’s your body really worth? New AI model reveals your true biological age from 5 drops of blood
Protein accidentally lassos itself, helping explain unusual refolding behavior
With bird flu in raw milk, many in U.S. still do not know risks of consuming it
University of Minnesota research team awarded $3.8 million grant to develop cell therapy to combat Alzheimer’s disease
UConn uncovers new clue on what is leading to neurodegenerative diseases like Alzheimer’s and ALS
Resuscitation in out-of-hospital cardiac arrest – it’s how quickly it is done, rather than who does it
A closer look at biomolecular ‘silly putty’
Oxytocin system of breastfeeding affected in mothers with postnatal depression
Liquid metal-enabled synergetic cooling and charging: a leap forward for electric vehicles
[Press-News.org] Tips for Business Owners to Avoid Tax AuditsWhen running a small business, taking the time to guard against tax audits is a worthwhile investment.