Audit is the dreaded word when it comes to taxes, both personal and professional. Particularly for small businesses, tax information can be confusing and overwhelming when trying to manage it on your own. Gonzales Group, a San Antonio TX CPA firm can help you understand all of the tax rules that apply to you and just how long you need to keep your tax filings in case of audit.
An audit is when the IRS contacts you for further review of your small business tax filings to ensure they’ve been reported correctly. While it’s sure to have anyone worried that there was a mistake and you may be penalized, remember that some audits are purely random and aren’t flagged because of any specific concerns. The audit is done either in person or via mail, but either way, it helps to have an expert to help you when you receive notification.
Generally, the IRS will only go back as far as three years for your business taxes. You don’t have to save decades worth of documentation. The statute of limitations is typically three years after the return was due or filed. However, they can look back six years if they find a major error, which is another reason to work with an expert right from the start. However, this exception is if you omit 25% of your gross income or intentionally try to evade paying taxes and file fraudulent returns.
Within the three-year statute, you’re most likely to be tagged for an audit for simple errors in miscalculations and incorrect data. These kinds of errors can typically be avoided by working with an expert who prepares your taxes. Other signs that can cause the IRS to want to audit are if your employees are paid much higher than would be expected, or if you claim a large charity donation that doesn’t match to your income.
It’s important to keep clear records of your finances, as well as all the relevant tax filing documentation. To be safe, keep it all for six years. To be even safer, work with a San Antonio TX CPA, such as the ones at Gonzales Group, to handle your tax filings and, if necessary, to help with any random audit.Tags: Accountants San Antonio tx, CPA in San Antonio Tx, IRS Accountants San Antonio
This post was written by Gonzales Group CPA