Apr 03, 2009

Red Flags for Small Business Tax Audits

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The IRS estimates that businesses underpay their taxes by about $90 billion per year, which is why they spend a lot of time auditing small businesses, especially those whose owners file Schedule Cs. If you still haven't filed your tax return, be careful about puffing up business expenses, especially travel and entertainment expenses. The IRS knows how tempting it is to claim business deductions for personal meals and personal use of items like cars, cell phones, laptops, and other cool gadgets. For more red flags to avoid when claiming deductions, here's a good rundown on the New Entrepreneur blog.