NASE Blogs

Audit Fear

Wednesday, July 21, 2010

Q: I just started a welding business and am terrified of getting audited by the IRS. Are there any things I can do to make sure I prepare all of my taxes correctly?

A: As a new business owner, you have the opportunity to get started right with respect to tax preparation.

Tax preparation isn’t just about filling out tax forms. It’s also about maintaining adequate records and staying organized so you can avoid potential problems. My advice is to follow the three Cs of tax preparation:

1. Careful record keeping – Keep accurate records and notes so you can support each number on your tax return. Most returns aren’t reviewed or audited until years after they’ve been filed. Your records will help you remember and substantiate deductions if your return is audited down the road.

2. Check the math – Use an accounting software program (like QuickBooks) and a tax preparation software package (like TurboTax Online) to avoid making math mistakes in your financial accounting and on your tax return. Both of those programs are available to NASE Members at NASE.org.

3. Consider a professional – It can be worth your time to have a tax professional help you set up your accounting system and review your tax returns. Even if the professional doesn’t prepare your returns, a simple review is always helpful.

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