SMB Now - Small & Medium Business Magazine
Tech Travel Agent, your one point of contact. Follow SMBNow on
These Social Networks
Follow SMBNow on LinkedInFollow us on Google+Follow us on Twitter
      Saturday, December 16, 2017

 Subscribe in a reader
 



Editor Login

SMBnow.com / SMB News / Audits: A Tough Year For SMB
Wednesday, October 17, 2012
467 Update by Robert Beagle,
Leave a Comment

Audits: A Tough Year For SMB


By Laura Messerschmitt, Outright VP of Marketing

It’s what every small business owner dreads – an IRS audit.  Yet, more of our nation’s small businesses are going to be faced with audits in the coming year according to new guidelines released by the IRS. 

For the IRS, the main purpose of doing audits is to reduce the tax gap.  The “tax gap” is the amount of taxes that go uncollected because of the underreporting of income.   The IRS believes that small businesses account for 84% of the $450 billion of this gap.  Based on the 2013 audit guidelines released recently, the IRS will be focusing on small businesses to try and catch businesses who are underreporting their income.            

While there are eight areas of focus that the IRS has declared for this year, there are really two key changes that all small businesses should pay particular attention to.  First, audits on sole proprietors and LLCs who make over $1MM in annual revenues will see increased audits.   Last year, the IRS audited a full 12.5% of these small businesses and that percentage is expected to go up.  If you fall into this segment, it will be critically important that you keep good records and have a bookkeeping system` in place, so that you can adequately respond to any audits that you might face.

The other change that has the potential to have a broad-reaching effect across all small businesses is a new pilot program that the IRS is putting into place that will audit small businesses based on their 1099-Ks.  The 1099-K is a form that small businesses who take credit cards may receive from their credit card processor or third party payment network.  The IRS will also receive a copy of this form.   The IRS estimates that 53 million of these forms will be sent out.

In a pilot program for this year, the IRS will be comparing the amount of revenue reported on the 1099-K with the amount that the small business reports.  Those small businesses whose returns do not match the 1099-K form will have a higher risk of being audited.  This makes it absolutely critical for small businesses to double check that they are reporting all of the income included on their 1099-K forms.    

While nobody likes to think about or prepare themselves for an audit, small businesses should be thoughtful this year with their taxes so that they can be prepared for their increased audit risk this year.


SMB News Archive
   
  FREE SMB News Release
  Apply for the Rentacomputer CARES Scholarship
 

Computer and AV Rentals Nationwide

 

Security Cameras
Camera Security and Surveillance

   
 

Computer Service and Networking Nationwide
Computer Service Now

   
 

Laptop Rentals
Laptop/Notebook Rentals

   
 

Projector Rentals Nationwide
LCD Projector Rentals

 
 

 


 
If you have an SMB targeted company, please send SMB news story ideas to:
 
 
Visit other Xponex Web and Media News Publications
Main Street Monroe    Middletown USA


Copyright ©2017 SMBNow.com    Privacy Statement