Okay so we have been in business for 14 years. Never ever been audited by the IRS. Got a letter, we are getting audited. (Year 2005) Talk about anxiety. One of the times I am sooooo thankful to have an accountant. He said sometimes it is just random. He looked over 2005 and didn’t see any errors. I have somewhat but don’t really know what the heck I am looking for.
I will say this…I am so glad I don’t skim, I don’t pay under the table and run a legite company…but with that being said…ARggghhhhh…
Has anyone ever been audited by the IRS? Can you tell me a bit about it?
Sounds like you should be fine. The big items that businesses like ours get dinged on are:
Undeclared sales (discovery via food costs)
Undeclared wages (often tied to undeclared sales, also identifiable by common ratio analysis)
“Employees” paid as “contractors” (so many businesses screw this up, for the most part, there are no contractors in restaurants)
Unsupported or non-business expenses. (What are you writing off? Travel? Personal groceries? Stereos? TVs? If the business bought it, it should not be in your living room)
I have not been through one myself, but have worked with a number of businesses that have. It ain’t pretty when it goes south. My only suggestion; let your accountant handle it. Don’t go to the meeting.