Biggest Audit Risks for Business Owners

Biggest Audit Risks for Business Owners

The Schedule C for an unincorporated business and the Schedule F for farming activities are the forms MOST AUDITED by the IRS! The IRS has published the following list of issues they scrutinize when auditing the Schedule C and the Schedule F:

  1. Lack of record keeping for automobile use – no mileage logs.
  2. Personal phone and meal expenses being deducted.
  3. Expenses of a spouse who is not active in the business.
  4. Deposits vs sales – looking for unreported income.
  5. Employee vs independent contractor status for subcontractors.
  6. Personal use of or conversion of business assets to personal use.
  7. Hobby related activities being reported as businesses.
  8. Farming and horse related activities that lack an expectation of profits.
  9. Home offices that don’t meet the exclusive use criteria
  10. Farm operations that do not allocate expenses between personal and business.

Congress has passed many tax laws that have created opportunities that you may be able to benefit from if you act now!  We would like to assist you with taking advantage of these opportunities and minimizing your tax bill, but we need your help.  The first step is to make last year’s financial records for your business available for our inspection.  Upon reviewing your information, we can offer you tax saving ideas that could save you hundreds of dollars in taxes and possible penalties!

To make sure we are basing our recommendations on accurate information, it’s important to make sure your business transactions are recorded in an efficient and accurate manner.  We can assist you with this process, but we must get started soon.  Call my office at 301-473-4445, or send an email to, to schedule your appointment.

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