For more than a decade, Todd Mardis has led Capital Preservation Services, a financial consulting firm tailored to the tax planning needs of high-earning professionals. Todd Mardis possesses more than 20 years of experience, developing tax liability and business development plans for highly-compensated medical professionals and successful business owners.
Capital Preservation Services offers a defense strategy in case business owners are selected for an IRS audit. While the overall chances of being audited are low, business owners and sole proprietorships have a higher likelihood of being audited than those in traditional employment. This is usually due to the following accounting errors or practices that can trigger a deeper investigation:
1. Overuse of cash - Cash is more difficult to track and account for, so businesses that compete mainly cash transactions are more likely to be audited. The same applies to businesses that have processed a cash transaction exceeding $10,000.
2. Unusually high salaries - If the owner or employees are receiving income that well-exceeds industry standards, it could draw scrutiny from the IRS. Rapid increases in salary can also attract attention from authorities.
3. Poor calculation methods - Some small business owners choose to work with rounded or estimated numbers. This can cause significant accounting errors and trigger an audit.
