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How do you avoid an IRS audit? In this episode of the Small Business Tax Savings Podcast, Mike discusses how to prevent an IRS audit, from co-mingling personal and business expenses to having separate bank accounts and credit banks, ditching cash payments, and taking bookkeeping seriously.
Mike provides tips on what’s needed for business purposes and how to prove payment. He explains the details behind documenting automobile expenses like mileage logs and receipts to support the business purpose.
Tune in now as Mike shares his advice on being aggressive in taking advantage of laws that are advantageous to you, so you can ensure you have all the documentation you need for your expenses in case of an audit!
[00:25] The Best Practices To Avoid An IRS Audit
- Today’s episode is all about avoiding an IRS audit
- What are the best ways to avoid an IRS audit?
[05:00] How To Avoid An IRS Audit As A Small Business Owner
- The documentation needed for business expenses:
- Receipt/invoice with a dollar amount
- Proof of payment
- Itemized receipts are recommended to have as much detail as possible
- Who, what, where, when, and why should be written directly on the receipt for any business expense?
[07:16] Understanding What Documentation Is Needed For Business Expenses And Automobile Expenses
- Proof of payment is required to ensure that a payment was made for the item
- Documentation should be kept in a digital file
- A mileage log is required for automobile expenses
- Documentation should include details of the business purpose of the trip
[15: 55] Closing Segment
- Mike shares his advice on being aggressive in taking advantage of laws that are advantageous to you!
- Final Words
Key Quotes
“As a business owner, you have a huge advantage… You have nothing to worry about because you have all the documentation to back it up. Be aggressive. We always say be aggressive, but don't get greedy.” – Mike Jesowshek
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Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
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Podcast Website: https://www.TaxSavingsPodcast.com
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To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a call at 844-327-9272 or send your questions to us at: Ask@TaxSavingsPodcast.com
