The Top 10 Dealing Effectively with the IRS

The Top 10 Dealing Effectively with the IRS

Category: Profitability, Viability, Revenue, Pricing, Cash Flow (AN23)

Originally Submitted on 8/10/2000.

Many small business owners, especially when starting out, dread the possibility of being audited by the IRS. These recommended points won't guarantee all will go well, but following their direction will certainly help.

1. Get your tax person to set up your recordkeeping system for both paper and electronic information.

This may cost a little bit, but will pay off immeasurably in saved time and energy when tax time comes around. The primary purpose is to document your business activity, so be sure you follow the same format accountants and the IRS use.

2. Use a current and reputable electronic recordkeeping system that you find easy to understand.

You won't use the program if you find it difficult.

3. Be sure your tax person is a CPA.

If the IRS starts looking at your books, you want someone with you who has credibility.

4. Be sure your tax person has some experience under his/her belt, or at least has ready access to colleagues with experience.

That's unfair, I know, but you can't afford someone else's learning curve mistakes.

5. Be sure your tax person keeps current on the tax laws.

You too need to keep current, even if it is the CPA's responsibility. Your signature goes on that tax return as the responsible person.

6. Be sure your tax person is ethical and honest.

Those you hire are a reflection of who you are.

7. Be sure *you* are ethical and honest.

Does this one really have to be explained? I hope not.

8. Document, document, document.

Keep a paper receipt for everything. If it isn't documented, it didn't happen.

9. Be profitable.

Make a profit within the first 5 years or the IRS can call your business a hobby.

10. Pray!

About the Submitter

This piece was originally submitted by Ruth H. Ledesma, Survivor of an IRS inquiry, Professional Coach, who can be reached at coach@RuthLedesma.com, or visited on the web.

This content may be forwarded in full, with copyright, contact, and creation information intact, without specific permission, when used only in a not-for-profit context. For other uses, permission in writing from CoachVille is required. Questions: email topten@coachville.com

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