Your business return is a report to the IRS and to you State department of revenue. It says a lot about your business and about you. But it also says one really important thing that you might not even be aware of.
Your business return says whether you should be audited or not.
Here’s a brief outline of eight mistakes that you want to avoid on your business return. For more information on these mistakes, and how to avoid them, please see Smart Business Stupid Business.
Mistake #1: Selecting the wrong business type for your business.
Mistake #2: Selecting the wrong NAICS code for your busness.
Mistake #3: Failing to elect to amortize your start-up costs.
Mistake #4: Not selecting the correct accounting methods.
Mistake #5: Not taking the full amount of loss in the start-up year (or for that matter any growth year).
Mistake #6: Not reporting inventory for a retail business.
Mistake #7: Making a mistake with your salary.
There are two things you can do wrong:
- Pay yourself a salary when you’re in a structure like an LLC or LP or
- Not pay yourself a salary when you’re in a structure like an S Corporation.
Mistake #8: Not setting up an audit defense.
Got more questions? Check out Chapter 17 in Smart Business Stupid Business, now part of a Smart Business Smart Investment 2 for 1 package!