Taxes

I’m Getting Audited! What To Do and What Not To Do

Did I Tell You Guys I was getting Audited?

 

 

Oh Yeah…that just happened!

I really didn’t think that I would get audited….I mean ..who thinks of these things right?

Tax Audit!removed

You see, I made a tiny mistake on my return. But of course, they went back a couple of years just to make sure I’m claiming everything I’m supposed to as a small business.

 

But as an online business, we kind of go by a different set of rules.

If you have an MLM or direct selling business, they should tell you these things. But as an online coach, there are things that are kind of in the grey area of things.

 

Things I learned on this Audit:

 

Fact #1

From the time that you start your business, you have 3 to 5 years to show a profit. After that , the IRS will send you a letter pretty much saying….because you haven’t made a profit in these 5 years, this is really not a business- its more like a hobby…….so we are going to let you write off stuff …only up to what you made.

 

Which means: After the IRS sends you that letter- if the next year you made $300- that’s all you can write off. As an online business, that can hurt you.

What does that mean to you? After the 2-3 years – start showing some profit.

 

Fact #2

When you file your taxes, also find yourself a tax auditing service that will be there just in case you do get audited.

Believe me- if you have an accountant- ask if they will represent you during an audit.

Most of the Tax places should have something like that in place. I paid for Tax Audit every year from Turbo Tax. They were worth every penny! No stress!

 

Fact#3

When filing your taxes, make sure you have your receipts. Also if you travel- grab a flyer, take a picture of what you are doing there, something~!

When I was going through this audit, even though I had receipts, and car log reports, they asks for a flyer or a ticket or something that shows that it was a part of a business activity. We had taken pictures of our presentations at our locations and we had flyers to back up our travel expenses. If we didn’t have that then they would have disallowed the write off.

 

Fact #4

Don’t Panic! When you first get the notice it looks scary. (I think its supposed to ) But just take it down a notch and consider it a challenge! You may possibly get more money back- you never know!

But, for me, what made it easier was that I had someone going in for me- I didn’t have to do all the talking. Just saying.

But if you don’t have someone going in for you like Tax Audit, then schedule the appointment as far out as you can and then try to get in touch with the actual auditor. Most likely they will tell you what they are questioning and then when you go to your appointment you will have everything in hand.

Remember these are people too- so you can do it!

 

 

I had a lot of tools with me that help me with this process. I was well prepared and my documentation was in place because these tools saved my butt!

 Taxbot

This tool is absolutely amazing! It is an app you can install on your phone that gives you the capability to take a picture of your receipt and then enter all the information that you need right then and there. Also at the end of the year- Tax bot puts all of your receipts and your recorded mileage in a nice neat package that is “Audit Proof”, which means that it has everything the IRS will ask for just in case.

taxbot

 

TaxAudit

I get this service when I’m checking out with Turbo Tax. But you do not need Turbo Tax to get this. They have memberships and they have emergency services as well. They pretty much take your paperwork and deal with the auditor. Most of them have prior networking relationships with the Auditor, so they know what they want to see. This helps your case in the long run. Worth the money!

taxauditservcie

Tax Organizing

Year round there are Congress approved write off that Small Business Owners can pull off that others that are not in a business can.

Ron Mueller is a tax representative that is always keeping up with what small business and in particular ONLINE BUSINESSES can do and can’t do. He spells it out pretty good.

He has a couple of courses available, but it is totally worth it to sign up for his free newsletter or webinar..

His newsletter itself always gives entrepreneurs a heads up when Congress passes the latest and greatest.

Click Here to grab the newsletter!

ron

 

Thats i! These are my Tax Audit Saving tools. I hope this helped!

 

Leave a Reply

Required fields are marked*