I was recently at a meeting with some attorneys, and the topic was finances for our law firms. The finance guys said that there was an increase in audits for schedule C filers. Logically, then one should consider creating a corporation for their law firm (because they don’t file taxes on Schedule C), at least in part to reduce the chance of audits, right?
Audits Rising For Small Businesses
I had read a lot articles which also said that audits for Schedule C filers had gone up, as well as S-Corp tax returns (Form 1120 S), and so when saw my tax pro, and he confirmed not only that audits on Schedule C filers are on the rise, but for small businesses across the board, including LLCs and S-Corps. So I asked, as far as reducing the risk of an audit, would there be any benefit to creating an entity (corporation or LLC)?
“No.”
So what is a Small Business or Self Employed Business? The IRS website says:
. . . . . individuals that are fully or partially self-employed, and businesses, including corporations and partnerships, with assets less than or equal to $10 million.
Back in April 2010, Business Insider published an article noting that small businesses are being audited more than big business.
Make sure keep your books in order and have a good tax pro! Or just have assets over $10 million, what ever works. Dan (Not tax advice).
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