The first time I was audited I was worried about perhaps paying an additional amount. The IRS agent in my basement office flat out told me, “Oh, you’re going to pay more. I’m just here to figure out how much.” I told him, “I’ve been pretty careful.” He then picked up a file of receipts to run a total and compare notes. The first receipt was bogus. It was from a purchase several years before. In wasn’t intentional, but my confidence was shaken.
If you are a small business, you can probably figure out how to fill out the forms and total up what you are going to have to pay. The problem is that you don’t know all of the ins and outs.
“The only two things that scares me are God, and the IRS.” – Dr. Dre
“If you are a start up, it is advisable to spend a little time in getting in-depth knowledge of all the rules. If you are smart enough to break the codes, you can easily get a benefit of tax saving through your investments. In case of small businesses, you can file Schedule C, which allows you to reflect your calculation of Costs of Goods. It helps in reporting and documenting the amount of your business profit and the cost kept behind making the purchase of the goods. The whole review of the difference between the two costs of purchase as well as of selling will reflect the actual amount of tax, you have to pay for.” – Achal Mehrotra in the article Business Tax Return – All You Need to Know
Many small businesses can’t afford to have an accountant all year round. Most get by with a bookkeeper. Often bookkeepers are barely qualified. Then the details are given to a CPA. If you have a thriving business or operating a business that looks like it will produce a profit now and for sometime in the future, then you need to talk to a CPA well into operation. Dan Nicholson founder and CEO of Nth Degree CPAs always asks the question. “What if you had a financial expert helping you optimize your business and family financial situation all year long?” Having a financial expert steer you in the right direction and making suggestions about saving money on taxes is always a great way to go. Dan has worked in finance and accounting roles at Clark Nuber, UPS, WaMu, as well as Deloitte and Touche’s Audit and Enterprise Risk Services practices where he was primarily responsible for auditing both the financial statements and IT internal controls around the Treasury cycle at Microsoft. You can check out Dan’s blog for all kinds of money saving and money making suggestions – www.nthdegreecpas.com/blog/
If you want to do everything by yourself then you need to get some basic information – IRS Guidance in Plain English – www.irs.gov/newsroom/irs-guidance, but be prepared to face an audit or two like I did.
If you have a relative who has an accounting degree, and you think they are trustworthy and brilliant, then go for it. Otherwise, you might consider talking to Dan. I did. He’s a nice guy . . . and knows what he is talking about. Right now you have a partner that will help you profit. President Donald Trump has lowered the corporate tax rate and has made other changes that can help almost any small business, as well.