The IRS have hired an additional 15, 000 agents for the upcoming tax season. In the state of Virginia alone in 2 years 7,000 agents were hired. The government needs money and they have elicited the help of the IRS to help collect. They are serious and focused on targeting small businesses. Some items the IRS are requesting when they audit small businesses are:
- Invoice and receipts
- Logs to track miles
- Income and expense ledger
- Proof travel was taken for business.
- Daily business calendar or Tax Diary
- Proof of home office deductions
- Many others
It is very important that the information above answers the following questions:
- Who
- What
- When
- Where
- Why/How
I have always believed that too much information is better than not enough information.
When a small business is audited by the IRS, the questions that need answers are:
- Who were you with / whom did you visit (if any one)?
- What was the purchase or the event for?
- Where did this event or purchase take place?
- When did the purchase or event take place?
- Why or how does it pertain to the business?
I think it is better to have the answer to a question not asked then not have an answer to an asked question.
To put it simple, if a business owner keeps thorough records in anticipation of an annual IRS audit then the business will not have anything to worry about.
Having thorough and organized records makes it more affordable for the tax lawyers, tax professionals or accountants to counsel a business during an IRS audit.
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