Paying taxes is a reality for every business that’s out there. The tax service is something that many people fear to hear from, given that they audit about one in every hundred tax returns each year. Even if your business is entirely clean and your accounts are well taken care of, you want to avoid audits simply due to the time, attention, and stress they can take, which can be quite a distraction from your business. Here, we’re going to look at a few tips that can help you reduce your chance of being audited.
Be Mindful of How You File
It’s a recommendation worth following that you do not file your own taxes, but even if you must, then you should make sure that you don’t make mistakes and don’t get sloppy. Make use of accounting software to ensure that you’re not making mistakes or missing any information. One of the single best ways to make sure this doesn’t happen is to start working on filing your taxes early so that you don’t have to rush through them when tax time comes.
Don’t Go It Alone
As mentioned, it’s not recommended that you file taxes by yourself. To that end, you should make sure that you take the time to work with a chartered accountant. Not only do they make it their explicit business to manage accounts as effectively as possible, but they are also uniquely qualified to offer tax strategy advice. They can take a look over your accounts and show you where you could make claims to keep more of your money through exemptions and the like, as well as when that might be a potential red flag that would trigger an audit.
Track All Expenses
There are also apps and tools that you can use to make sure that you’re keeping on top of all of your expenses. Track every cost in the business, from all of your inventory to your travel expenses, and especially those odd expenses that don’t come around every so often. You have to make sure that you keep your receipts and note down all of the costs in your business. You should try to be mindful of what you claim on expenses as well, as high expenses during years of low profits can be a serious red flag. As you scale your business, you are likely to have even more expenses, including those that might look out of the ordinary, so be prepared with the receipts for each and every one of them.
Be Ready if You Make Too Much Money
Sometimes, no matter what you do, you’re likely to trigger an audit. This can happen if you either make much more money than you have in years past or if you make a lot less money. To that end, you should make sure that you avoid any of the other red flags that might trigger an audit and, otherwise, simply keep your records as pristine as possible by following the tips above.
To some extent, whether or not you get your business audited is out of your hands. However, with the tips above, you can make sure that everything is as clean and orderly as it should be.