As a business owner, filing your taxes correctly will help you remain in good standing with the Internal Revenue Service (IRS). While working with a Certified Public Accountant (CPA) is the best way to avoid an unwanted business audit, there are a few precautions you can take as you prepare your taxes to prevent raising red flags with the organization. To help you do this, here are a few common mistakes that may lead to an audit.

What to Avoid When Filing Taxes for Your Business

1. Not Filing on Time

The IRS typically understands that oversights happen, so filing slightly late once or twice usually doesn’t result in an audit. However, if you consistently miss your deadline, they may begin to suspect that something is amiss with your preparations and deductions and will likely request an audit. To avoid this issue, start working with your CPA far in advance. 

2. Claiming Too Much for Charities

The IRS considers 3% of your annual income to be the standard amount for charitable deductions. If you go over that amount, they may request an audit to ensure your filing is accurate and you aren’t exaggerating in any way. However, the legal limit is 50% of your adjusted gross income, so as long as your CPA can prove your files are correct, you will not have an issue if you’re audited.

3. Over-Claiming Your Vehicle

It’s normal for business owners to utilize their personal vehicle for commercial use. If you do, your CPA may advise claiming part of that use for deductions. However, it’s unlikely your vehicle will be used for commercial use all the time. As such, if you claim 100% of your driving time for business purposes, an IRS audit may happen.

If you want to avoid an IRS audit, turn to the CPAs at Engelson & Associates in Holmen, WI. With a broad range of high-quality financial services, they have the knowledge and expertise needed to keep you in good standing with the IRS. They help with tax preparation and even QuickBooks™ programs to ensure your small business operates efficiently. Visit their website for more information on what they do, or call (608) 526-3437 to schedule a consultation.