1. Keep a Separate Bank Account For Your Business
I see this one all the time with people you use. Maybe a business accountant, but you run some personal expenses through it...
Or maybe you run some business expenses through a personal account. And it shows the IRS that you’re not really treating the business as a business.
The default from the IRS perspective is any deposit in a bank account is income unless it’s proven otherwise.
2. Support For All Deposits
There are many other types of deposits that may not actually be income. For Example, any type of deposit that would not be considered income would be deposited from debt.
You need to support every deduction because if there’s no support, the IRS may disallow them.
3. Support For Deductions
Now, a good baseline at a minimum has bank statements showing these expenses. But really what you want is receipts for every transaction.
If you actually get pulled for audit one by having a good CPA in advance, they’re going to tell you all of this and they’ll be able to provide more information
4. Have a Good CPA
so that you’re already prepared and then if you are actually pulled for an audit, it’s much better to have the CPA handle.
This one is just a recap of everything because it’s so important. It keeps good records all the time.
5. Keep Good Records
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