The phrase “audit” probably sends shivers up the spines of most small enterprise homeowners. Audits are worrisome, time consuming, and really costly by way of skilled charges and potential taxes, curiosity, and penalties.
Enterprise Audit Truths
However a greater understanding of audits might cut back considerations or, if essential, assist to deal with them extra simply.
1. The possibilities of being audited are very low.
Based on the 2020 IRS Information Guide that gives statistics on IRS audit actions throughout the federal government’s earlier fiscal yr (September 30, 2019, by way of October 1, 2020), solely 0.1% of S firms have been audited. The proportion for partnerships was even decrease. The speed for C company with a stability sheet of $5 million was solely 0.3%. There are not any separate statistics for Schedule C filers.
Whereas the IRS is searching for funds will increase with the intention to step up