IRS audits are on the rise. If you get a notice, the best advise is to get a pro to help you out with the auditor. Your job is to get your records in order…and fast!
Here are a few of the mistakes they are looking for:
Not maintaining a separate business checking account
Not maintaining a log tracking business miles driven
Inability to determine success of business
Customer files not maintained
Continued expenditures in activities that show little or no profit potential (such as craft shows and exhibitions)
Bartering transactions that are being done with parties
Not issuing Form 1099’s to Independent Contractors
No agreements in place
Operating in own name (not as a corp or LLC)
Better yet, don’t wait until you get an IRS audit notice to get ready for it.