If the IRS decides to audit your business or company, they will check whether or not an individual or business entity has reported accurate taxable income, losses, expenses, deductions, and more in compliance with the federal tax law.
If the IRS auditor finds even a single mistake, they will issue a request to fix the mistake by mail or in person. This mistake may result in a penalty, fee, or fine, depending on the mistake and severity of the mistake.
This is why it’s imperative you get an outsourced accounting department for your financials who knows what they are doing…
Is it a Big Deal to Get Audited by IRS?
Whether it’s a few thousands of dollars or a few million, it’s a huge deal to get an IRS audit notice. While the notice may ask for documentation you can already provide, an audit means you’re on the IRS’ radar for one reason or another. They will tell you why you’re on their radar, but how you handle the request will determine if they continue to pursue you or not.
The proper planning, filing, and managing of your financials and tax obligation help prevent and reduce our tax audit possibilities.
What Does an IRS Auditor Look for When Examining a Business or Company?
Revenue, taxable income, deductions, operating expenses, and more.
The auditor will look through your business/company financials in accordance with what they’re trying to find. If you made a mistake on your taxes, they will look through your financials in as much to resolve the mistake or error. If they find more errors in an effort to resolve the initial error, they will increase their search efforts. The auditor could snowball your financials and become more than a thorn in your side.
This is why an outsourced accounting department is so important for your business or company; it allows for you to work on your business instead of in it, manage tax obligations legally, and remove barriers to growth.
What Happens if You Are Audited and Found Guilty?
Depending on the severity of the conviction, you could pay a small penalty or serve time in jail. The IRS is in the “collection business.” If your financials are not accurate, spot-on, then you are at risk of paying a penalty or even going to jail. This means you, your family, your business/company, your employees, and your customers are at risk if you do not take care of your legal tax obligation.
What Happens if You Get Audited and Owe Money?
The IRS will request that you pay the owed money and will most likely add a penalty, fee, or fine on top of what you owe. In some cases, the money they say you owe can be reduced to zero if you show specific documentation of deduction, depreciation, or otherwise, which means not every IRS request for “more money” is necessary to pay.
This is much easier to manage if your accounting department knows what they’re doing.
What Happens if You Get Audited and Don’t Respond?
Worst case scenario, a warrant for your arrest is issued and you go to jail. Tax evasion is a serious crime. You can avoid the most severe consequences if you “come clean” and pay your legal tax obligation. The tax code incentivizes specific business actions and activities, which means you’re probably already paying too much in taxes. You can reduce obligation by simply doing what the tax code requests you do.
Avoiding tax obligations is never a good idea. However, you can reduce that obligation and avoid jail time and/or penalties with a great accounting department running your financials.
How Do I Outsource My Accounting for a Third of the Cost?
I deliver spot-on, accurate reports weekly, monthly, quarterly, or whenever you like.
I reconcile and bring books current – the very first time, so you can work on growing your company instead of struggling inside of it!
I forecast your financial future so you can grow your company toward financial success.