Having a financial audit is a recurring nightmare for many small business owners. But TheStreet.com reports that home-based business owners can prevent many audit issues by starting an LLC for their company.
By creating a separate corporate entity for the company, a business owner can separate bank accounts and financial statements, so that personal and business expenses do not get jumbled together. The site reports that in the past, the IRS has said that some business owners were treating their company as a hobby rather than a business, and therefore weren’t eligible for business tax deductions.
IRS auditors also notice if a business owner does not have business cards or letterhead related to the company, according to the site. There are a number of inexpensive websites which can help a business owner create personalized office supplies that give added legitimacy.
Tax problems are a continuing headache for small business owners, even if they are doing them correctly. A recent study by Galaxy Research found that most companies spent 60 hours per year keeping their financial information current.
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