The new year is here, and with it comes the ever-dreaded tax season. For many San Diego business owners, this time of year brings added stress—not just from filing taxes, but from the looming possibility of an IRS audit. Even if your company has meticulously maintained its financial records, California state or federal tax authorities may still select your business for an audit.
While the process might seem arbitrary or even unfair, IRS audits often follow certain patterns. Understanding these patterns can shed light on why your business might be targeted, and more importantly, why hiring a CPA attorney like Hone Maxwell can make the difference between a successful resolution and a financial nightmare.
Why Your Business Might Be Targeted for an Audit
IRS audits aren’t always the result of wrongdoing. The agency employs several methods to identify businesses for review, some of which may seem random but are designed to detect potential discrepancies.
First, the IRS conducts random audits every year to ensure compliance across the board. This seemingly capricious selection process allows the agency to catch businesses that may appear compliant on paper but could be hiding financial irregularities.
Cash-based businesses are another frequent target. Transactions involving cash are notoriously difficult to track and easy to manipulate, making them a prime area for potential misreporting. Auditing these businesses helps the IRS verify that reported earnings align with actual revenue.
Finally, businesses reporting consistent losses over multiple years often raise red flags. Chronic losses can lead the IRS to question whether the company is operating as a legitimate business or being used as a vehicle to shelter income. In these cases, an audit is often initiated to confirm the accuracy of financial reporting.
The Likelihood of Discrepancies During an Audit
Regardless of the reason your business is being audited, one thing is nearly certain: the IRS is likely to find discrepancies in your paperwork. Tax laws are notoriously complex and constantly shifting, making compliance a moving target for even the most diligent business owners. Small mistakes or misunderstandings in tax reporting can snowball into significant financial and legal issues when scrutinized under the lens of an audit.
This is why having the right representation during an audit is crucial. A skilled CPA attorney brings both financial acumen and legal expertise to the table, helping to resolve discrepancies and protect your business from unnecessary penalties.
How a CPA Attorney Can Help
The role of an IRS audit lawyer goes far beyond basic accounting. Professionals like those at Hone Maxwell specialize in representing businesses during audits and ensuring that their clients emerge unscathed. Their unique combination of legal and financial knowledge allows them to provide comprehensive support during these stressful times.
A CPA attorney will first evaluate your financial records to identify potential problem areas. They will then liaise directly with the IRS on your behalf, presenting evidence and negotiating resolutions to reduce penalties or liabilities. In the event of financial litigation, a CPA attorney can represent your interests, ensuring that the audit process doesn’t jeopardize your company’s future.
In addition to navigating the immediate challenges of an audit, CPA attorneys like Hone Maxwell provide invaluable tax advice to help businesses avoid future issues. Their holistic approach ensures that your company remains compliant while maximizing financial stability in the long term.
An IRS audit can feel like a nightmare for any business, but it doesn’t have to be. Whether your company was randomly selected, flagged for cash transactions, or targeted for reporting consistent losses, having an experienced CPA attorney by your side can make all the difference. By combining legal expertise and financial savvy, firms like Hone Maxwell ensure that their clients can survive even the most daunting audits intact.
If your San Diego business is facing an unexpected audit, don’t wait to seek professional help. Contact Hone Maxwell today to schedule a consultation and protect your company’s financial future. Let them handle the complexities of the IRS so you can focus on what matters most—running your business.