Do you make money freelancing or doing consulting work?
You need to be extra careful with your tax returns as there is a good chance that your return may be audited. So, get ready in advance and avoid future trouble.
“It is no secret that freelancers and self-employed people get audited more often than others,” said Sanjiv Gupta CPA. He further explained that with a huge IRS budget there are more free agents than ever, the I.R.S. wants to take a closer look at self-employed and freelance professional’s growing numbers and make sure they’re doing their taxes correctly.
In recent years the number of people doing consulting and freelancing has increased mainly due to layoffs and hiring freeze. Consulting is a great option for expert professionals but one needs to be careful when it comes down to filing taxes.
Similarly, Small business owners are at risk of being audited. According to recent surveys, if you’re a sole proprietor, you’re almost three times as likely to get audited as a corporate filer. This may be a good reason to incorporate your business. According to IRS, auditing small businesses is not because they don’t like small mom and pop shops but its because they are more likely to find errors and omission in small business owner tax returns.
Small business owners should consult with their Certified Public Accountant to make sure taxes are filed properly. This will significantly reduce their chances of being audited. At the very least, you will have peace of mind that there are no errors in your tax return.