With tax season in full swing, small business owners may be feeling some annual tax-related stress. How are the new tax regulations going to impact my business? Will I be facing a large tax bill this year? Will I be selected for a tax audit?
On the bright side, the IRS audits less than 1% of all tax returns. However, since small businesses tend to make up a higher proportion of that 1%, here are five things that you should be ready to defend in the event of an audit:
- Proof of business (as compared to a hobby)
- Paying reasonable salaries
- Classification of independent contractors vs. employees
- Proper documentation and classification of business meals and entertainment
- Completing and distributing tax forms on time
Watch the video below for more information: