Five Types Of IRS Tax Audits And How A Small Business Owner Can Avoid Or Beat Them

A small business owner has enough to worry about without the stress of an IRS audit. Avoiding an audit is easy when you understand how the IRS chooses which businesses to target. Beating this audit is even easier. Let’s take a look at who tops the IRS audit hit list.

Hobby Audit

The businesses most likely to be audited by the IRS are individuals who try to make a living doing what others do for fun. This includes people who work with horses or dogs, paint pictures, write books, gamble, play music, fish, or sell handicrafts.

Fail this audit and your deductions will be severely limited. If you work in one of these industries, you should document everything you do to generate income and operate like a business. Operating like a business involves regular bookkeeping, writing a business plan, actively seeking sales or work, tracking sales efforts, and making adjustments to increase profitability.

Frequent damage audit

Any small business that…

Leave a Reply

Your email address will not be published. Required fields are marked *