Monday, October 04, 2010

This Year IRS Audits Will be on the Rise

With all the tax changes and a federal budget deficit estimated at $1.6 trillion the Internal Revenue Service is pushing and gearing up to audit more returns. The focus will be especially strong on Schedule C fillers but will also affect Corporations and Partnerships.

Taken with the fact that the IRS is also training agents to work with QuickBooks and expects to begin to request QuickBook files as part of the audit process this could be a very tough year for the self employed or small business owner.

So a word to the wise! Be sure that your QuickBooks files and your receipts are in order. This has always been something that should be happening but for now and the foreseeable future it's of even greater importance than in the past.

Taking all of this into account this just may be the year that you want to get someone experienced in accounting and using QuickBooks to look over your books. The last thing you need is to have problems with the IRS and with their increased scrutiny that is a definite possibility. And sadly I find that most of the clients I have that use QuickBooks and are not having them reviewed are making mistakes that would put them in violation of several general accounting rules.

Remember having good books isn't just about ending up with the right total expenses and income for the year. It's also about records that meet the required rules and structured such that they are a business planning tool. Any good accountant, skilled tax preparer, or CPA trained in QuickBooks will save you far more than such a review would cost and just the peace of mind is worth a lot.

And with the advent of the internet, conference calls, and all the rest of the tools out there it's easier than ever to have your files checked, your questions answered, and your general procedures improved to increase your productivity. I know that I now manage books and file returns in over 11 states so it’s not even required that you’re located near your accountant or tax adviser. What’s important is that you find someone you feel you can truly communicate with and who will communicate with you.

So give some thought to making this the year that you’re sure what you are doing with your books is correct and that you would feel ready for an audit if one were to occur.

1 comment:

Daniel Stoica said...

Awesome Post Frank!

Great advise on ensuring that records are kept well!

I usually say: Keep your records assuming that you will get audited, therefore keep them well! :-)