When you’re growing a business from the ground up, it may feel like any challenge that could arise, does. But while some stressors can be put off, an audit from the IRS can be a serious and sometimes drawn-out process. If you’re worried about being selected for this financial investigation and having to hire a tax attorney, take advantage of the following guide.

What Are Your Odds of Being Audited?

In 2010, one in every 90 returns was selected for an audit—that’s 1.11% of tax returns. However, due to internal budget cuts, that statistic has decreased since then. In 2017, only 0.62% were audited. If you’re a sole proprietor making over $1 million a year, your chances of being audited rise to 4.4%.

What Factors Affect Who Gets Audited?

The more money your business makes, the more likely it is to be audited. Aside from this general rule, the IRS will look for red flags among the tax returns they receive. If your business conducts the majority of its transactions in cash, for instance, you might raise suspicions. Other red flags include using round numbers  — as that looks like your guessing figures instead of checking receipts — or reporting an excessive amount of meal or entertainment deductions.

How Can You Prepare for It?

If you receive a letter in the mail from the IRS that states your business will be audited, don’t panic. In most cases, they simply want to double-check your work—and the most common worst-case scenario would be an additional tax payment and penalty fee. To avoid this, be sure to stay organized. Gather documentation for all the income, expenses, deductions, and losses you have claimed, including electronic records as well.

In most cases, the IRS won’t come to your place of work for a field audit; you’ll likely have to communicate with them through the mail. Either way, it pays to consult with a tax attorney who can go over your responses and prevent you from making additional mistakes. If the IRS agent asks questions about your records or claims, always answer them honestly—the consequences of fraud are severe. If you have to meet them in person for the audit, your tax attorney can converse with the auditor on your behalf, which can take some of the stress off of you.

If you’ve been notified by the IRS about an upcoming audit, get in touch with Lance S. Cox, Attorney At Law of Cincinnati, OH. For over 30 years, this skilled tax attorney has helped clients prepare for and emerge from their investigation with the least amount of hassle possible. In addition to tax cases, he also handles estate planning services. To learn more about his skills, visit the website. You can also call (513) 528-6000 to schedule a consultation.