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IRS Audits and Record Keeping

Contributed by Sara Zaro, EA, President of Elite Bookkeeping & Tax Services

When the IRS conducts an audit on a Corporation, the agent will ask for the corporate record book. The Agent will review organizational documents, meeting minutes, stock ledger and resolutions.

If these documents are not kept current, the IRS can determine that you are running your business as a Sole Proprietor and change the taxation rules for your business. This could have a large tax impact on the owners of the business as some of the tax deductions taken as a corporation are not allowed as a sole proprietor.

This could result in higher personal income tax along with self employment tax before penalties and interest are added, which add up quickly. In some cases thousands of dollars have been owed by the owners because of poor record keeping of the corporation.

Corporate record keeping is just as important as filing the tax return, preparing the necessary minutes and resolutions annually makes the task relatively simple.

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08-05-13 | Comments Off on IRS Audits and Record Keeping comments | in Uncategorized

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