The IRS and You: How to Avoid a Payroll Audit
An IRS audit can be a catastrophe if you’re not prepared.
Starting in 2010 and continuing through the next three years, the IRS will be performing random employment tax audits of approximately 6000 companies under its National Research Program. While the IRS’s goals shouldn’t be of much concern to your company, the means by which they achieve them should be.
If the IRS knocks on your door, it’s best to be prepared.
Four specific areas have been selected for extra scrutiny by the IRS:
- Employee classification
- Fringe benefits
- Employee business expense reimbursements and
- Compensation of owner-employees and executives
If there is any doubt about where your company stands with regard to these classifications, it’s best to resolve potential pitfalls before they become problems.
Consider changing any practices that may not be in accordance with IRS laws; it might be too late in some instances, but improving your procedures for the future will not hurt. The IRS is expected to target companies with more than 100 employees and $20 million in revenue, because, after all, they are expecting some sort of return on their research program investment.
Hint: You have to look beyond the website or pricing page.
Gross margin documents the business your product is building, yet it’s often tucked away in a financial update while a medley of product metrics enjoy the spotlight.