A Sampler of Accountex 2018 Keynotes & Sessions

by Megan Kunis


Accountants Need to Be There for Entrepreneurs from the Start

Daymond John (of Shark Tank fame) said in his keynote address that he could have really used the help of accountants when he was starting his business. In fact, cash flow problems nearly shut down Daymond’s amazingly successful hip-hop clothing line FUBU when it was just getting started.

Daymond had borrowed $100,000 from his family for his first production run after securing $300,000 in orders. He spent it all right away on making clothing, not realizing that giving 60 and 90-day terms to his customers meant he wouldn’t be making any deposits for months.

Fortunately, Daymond was able to secure financing in the nick of time, but it was a very close call. He might have been able to avoid nearly going broke if he’d had an accountant helping him with some simple cash flow forecasting.

Back then, Daymond couldn’t afford an accountant. But now with the efficiency of cloud technology, there’s no reason why accountants and bookkeepers can’t offer basic services to entrepreneurs while they’re still in startup mode.

Every Person Is Now a Media Company

Randi Zuckerberg, former Director of Market Development and spokesperson for Facebook, talked about how Facebook and other social media platforms have democratized the media landscape.

Now, thanks to the cameras in our phones, every one of us has the ability to create content potentially viewed by millions of people — at no cost. You can use the internet and social media to build your own personal brand. It can bring clients, help you in your career advancement, or both. The benefits can be huge.

So why aren’t more of us doing this?

Five years ago, it used to be somewhat difficult to put yourself out there online. But now you can publish articles for free on sites like Medium or LinkedIn, which have a built-in audience thirsting for knowledge. You can stream live video to your followers on Facebook, Twitter, and Instagram. You just need a smartphone, not a complicated camera setup. You can use apps like Snagit to record “how to” screencasts and publish them to YouTube where prospects will find them and then come to you for more help.

If you aren’t doing any of this, I strongly encourage you to pick one of these channels and give a try. Try it for at least for six months. You may be surprised by the results.

Even Bookkeepers Can Build a $Million Firm

I was very excited to hear Melanie Power speak because she hails from all the way from Australia, and I’ve been following her for years online. Her private Facebook Group, Bookkeeper Revolution, provides a wealth of knowledge about technology and how to run a bookkeeping practice.

In her session, “The Million Dollar Bookkeeper,” Mel shared how she built her own firm bringing in over a million dollars of annual revenue with just three people.

She was able to do it by:

  • Leveraging cloud technology
  • Narrowing her focus to a niche
  • Focusing her product offering
  • Having a clear methodology, and
  • Knowing how to communicate her value

Time Sheets Are ‘Immoral and Unethical’

I’m a fan of anyone who applies economic theory and philosophy to how accounting firms should be managed. And that’s what Ed Kless does on a regular basis. He also enjoys being a tad controversial — also something I tend to enjoy.

Case in point: During a panel discussion called “Evolution of the Accounting Technology Ecosystem,” the topic of time sheets arose. Ed happily shared his view on time sheets, which is that they’re “immoral and unethical” when required of professionals — AKA knowledge workers.

That’s because timesheets can be used to help you or hurt you, depending on how a manager feels. And because all intelligent professionals know this, they all “manage” their time to somehow come in on time and budget. That’s why time sheets are mostly useless from a project management perspective — they aren’t real.

Another argument from Ed: You can’t value knowledge in terms of hours. It’s the wrong measurement. So why do we sell it that way?

The App Ecosystem Is the Future of Small Business Accounting

In his session “Zen and the Art of Application Integration,” Ryan Watson of Upsourced Accounting demonstrated a real-life example of the Xero “app ecosystem” in practice.

By implementing this tech stack, Ryan and his firm were able to eliminate tedious physical bank statement reconciliations, printing and mailing of paper checks and invoices, using spreadsheets to track employee hours, manual pay runs, and a whole pile of receipts.

The result was better cash flow and visibility into company performance.

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How to help clients go cashless

by Junita Jackson

The day of the cashless business continues to draw ever closer. You may have heard of how Visa declared a “war on cash” last month as they offered $10,000 to individual restaurants to go cashless, and the bank calculated that businesses could save billions in revenue and save millions of hours in labor. And while Visa does stand to directly benefit from such an approach, accountants should begin talking to their business clients about the reasons they should go cashless.

This conversation needs to happen sooner rather than later. Going cashless entails upgrading a business’s digital payment technology, and the sooner the business realizes the benefits, the sooner they can consider how to upgrade. At the same time, accountants must remind clients of mistakes that can be made while going cashless and afterward as well as how to avoid them.

The benefits of a cashless business

The simplest way to talk to clients about the benefits of going cashless is to note how fewer individuals these days are using cash. A 2016 Gallup survey found that only 24 percent of Americans make all or most of their purchases with cash as opposed to 36 percent five years ago. Perhaps unsurprisingly, the group who have dropped off the most in using cash are technologically savvy young people. Customers are embracing not just debit and credit cards, but new mobile technological payments instead of cash.

A business which has a younger clientele should thus more strongly consider going cashless. And going cashless can be just as convenient for any business as it is for customers. Employees can quickly handle transactions without having to waste time digging through a till for the right amount of change. This makes each transaction faster. Businesses can thus serve more customers and the customer spends less time waiting in line.

And while some small businesses may be concerned about the threat of hackers or electronic security, going cashless can improve physical safety. Having no cash in a till is the ultimate deterrence against thieves, robbers, and the occasional unscrupulous employee. Financial transactions also become more secure, as businesses no longer have to worry about how to store and count cash. Instead of sitting down at the end of every business day counting the total value of cash transactions, a financial ledger can quickly show how much cash the employee has, saving costs.

Going cashless is a major change which breaks with thousands of years of civilization. But the potential benefits of attracting a younger clientele as well as being able to quickly record transactions and having a real-time knowledge about a business’s financial health is huge and can be worth it under the right circumstances.

Slow and Careful Implementation

Despite these benefits of going cashless, plenty of business owners will still balk at the concept. Even if only 24 percent of Americans make all or most of their purchases with cash, that may mean losing a significant amount of customers. For these reasons, the process of updating point of sale technology to go only cashless needs to be done carefully. And according to the U.S. Federal Reserve Bank of San Francisco, 60 percent of business transactions under $10 are done with cash, in part due to how many small businesses require a minimum purchase to accept cash.

This means that as noted above, only certain businesses, such as online casinos, should look into going cashless and those that do may face a tricky transition period where they may lose a few customers. Above all else, a business interested in going cashless must make huge efforts to let customers know about this change. This includes sending an email and social media alerts as well as posting signs letting customers know that this business is going cashless.

Training your employees is also a critical aspect of going cashless as well. Going cashless almost certainly means upgrading a business’s point of sale technology, and all employees should be aware of how to use it. But even more important than that is that employees know why the business is undergoing this change and know how to answer common questions. For example, some customers may try to argue that a business has to accept cash as it is legal tender. This is not the case, which is why you cannot pay for your groceries by dumping a giant jar of pennies at the cash register.

Remember that no matter how much a business tries to inform customers of new changes, there will always be some customers who will be caught unawares and react negatively. Your client’s goal is to make that number as small as possible. By making the downsides smaller with preparation and training, your client can reap the benefits of going cashless and help make things easier for their customers as well.

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The Cutting Edge in PH Finance: You and AI

by Junita Jackson


In the recent years, foreign investors started taking notice of the potential of Filipino professionals in finance and accounting outsourcing in the BPO industry, making the Philippines one of the favored global hubs for corporate and shared service offices that produces higher-end of business essentials ranging from creative concepts, software development, medical transcription, and legal services to financial management.

The Philippines once became a world leader in business support systems according to IBM’s 2010 research of annual global locations trend, foreign investors are seeing competence in its qualified pool of graduates with their set of skills, flexibility to work on different shifts, adaptation to internationally recognized accounting standards and ability to communicate well in English.

As finance and accounting outsourcing accelerates dramatically in the Philippine corporate setting, the services are no longer limited to general processing and auditing that requires manual work alone as technology maintains its distance in providing continuous improvement in processing, device enhancements, and new software developments to ensure clients and corporations a growing insight on innovation and digital transformation of data.

With all these advancements, business leaders are expected to allocate resources responsible to keep track on financial operations such as tax reporting, account maintenance, payroll processing, analysis and auditing, management consultancy and the like. However, to get the peak of the mountain of work, collaborating with a third party organization specializing finance and accounting outsourcing is a tested and trusted business strategy among foreign corporations and shared services.

Getting an outsourced finance and accounting partner may help you save human resource allocation, but in order to pick the best one for the business, leaders may look on the possible corporate edges and consider the type of organization they may be interested to work with.

There are a few growth indicators that may help leaders create business decisions before tying-the-knot with a particular service provider:

Business Decision making

CEOs are able to make better investment decisions with the help of their finance and accounting partner by giving consultations from results of financial data and lays down all pros and cons for the business and the market. They suggest and re-assess investments and allocation if needed.

Technology Awareness

Competition starts with technology, the best service is often expected to work with digital convenience for the users and the company as well. A good outsourced partner should help the business thrive with digital developments that may save the company from having excessive allocation of investments without sacrificing state-of-the-art software applications and hardware improvements.

Research and Analytics

A study on your company’s financial performance is a proof of a good finance and accounting partner as gained knowledge from research and observation provides the most intricate parts of a business-decision, the facts, and the solutions.

In the report of Everest Research Institute last 2016, the global multi-process of finance and accounting outsourcing market witnessed an increasing number of providers using robotic process automation (RPA), this suggests that top service providers are now starting to invest in developing  their capabilities related to technology, delivery presence, and domain and process expertise.

Aside from machine advancements, leaders should put high importance in supporting organizational improvement, cost-reduction, and business-outcome driven insights with the help of their service provider.

Worldsforum Accounting is a world-class organization that provides expertise in helping companies build business advancement and achieve financial success at a low cost. They also provide finance and accounting outsourcing services with their unique method that helps companies to improve financial processes and cash workflow. Other services include: Transaction processing, Financial Management reports, Expert financial advice, P&L management, Risk Management, and the list goes on.

Did you find what you’re looking for? Maybe we can help you out. For more finance and accounting outsourcing information, contact us here.

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The most common mistakes when managing personal finances

by Jason Kelley

The ability to manage money competently is especially valuable quality in the conditions of the financial crisis when the purchasing power of the population is shrinking, inflation is rising, and currency exchange rates are completely unpredictable. Below are the common mistakes related to monetary affairs along with financial planning advice to help manage your own finances properly.

The budget is the most basic thing in financial planning. It is therefore especially important to be careful when compiling the budget. To start you have to draw up your own budget for the next month and only after it you may make a yearly budget.

As the basis takes your monthly income, subtract from it such regular expenses as the cost of housing, transportation, and then select 20-30% on savings or mortgage loan payment.

The rest can be spent on living: restaurants, entertainment, etc. If you are afraid of spending too much, limit yourself in weekly expenses by having a certain amount of ready cash.

"When people borrow, they think that they should return it as soon as possible," said Sofia Bera, a certified financial planner and founder of the Gen Y Planning company. And at its repayment spend all that earn. But it's not quite rational ".

If you don't have money for a rainy day, in case of an emergency (e.g. emergency of car repairs) you have to pay by credit card or get into new debts. Keep an account of at least $1000 in case of unexpected expenses. And gradually increase the "airbag" to an amount equal to your income for up to three-six months.

"Usually when people plan to invest, they only think about a profit and they don't think that loss's possible", says Harold Evensky, the President of the financial management company Evensky & Katz. He said that sometimes people do not do basic mathematical calculations.

For example, forgetting that if in one year they lost 50%, and the following year they received 50% of the profits, they did not return to the starting point and lost 25% savings. Therefore, think about the consequences. Get ready to any options. And of course, it would be wiser to invest in several different investment objects.

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Unpaid Business Taxes: How To Settle Your Debt And Avoid Bankruptcy

by Zach Haris

If your business is in danger of facing bankruptcy, there may still be a way to avoid it. The ramifications for a business bankruptcy is pretty dire and can affect not only your business but other companies who are involved with you in hopes of improving their own efforts toward success. By declaring bankruptcy, you are opting out of paying your debts to these companies that are expecting money from you. This, in turn, affects their business’ bottom-line revenue, because now they’re taking a loss.

Bankruptcy. Not Cool. Not Cool at All!

Imagine if you loaned a friend $100 who promised to pay you back. That’s $100 that you’re expecting to put back in your bank account. You may have already spent that those funds trusting that your friend is going to make good on his or her promise—especially if there was a signed agreement that he or she signed. Then next month, they file for bankruptcy! What does that mean for you? It means that you’re out of $100 and if you jumped ahead and spent that promised money, then that snowballs into another debt that won’t get paid, or money taken out another stream of revenue to supplement the loss.

Either way, it doesn’t look good for you.

When you file for bankruptcy, you’ll suddenly understand the origin of the term, “You’ll never do business in this town again!” because no one will want to conduct business with someone who can’t successfully manage a business.

Bankruptcy is Avoidable!

One way you can settle your business debts is to negotiate with each of your debtors to accept a reduced payment to settle the loan. Many businesses will gladly accept that than nothing at all once they learn that you’re going out of business. In fact, they will appreciate your efforts of coming to them first trying to work something out rather than leaving them high and dry.

This may sound pretty simple, but before you start making negotiations, you’ll first need to prioritize your debts. There’s still payroll and payroll taxes that need to be met as well as other business expenses like rent/mortgage and utilities. Make a list of all the most pressing debts that your business has and address them accordingly.

Still, Need Help?

Even with prioritizing your debts, deciding which businesses get paid and which ones don't can still be a painful process. Another way to settle your debt and avoid bankruptcy is to let the tax experts handle everything.

Success Tax Relief has over 30 years of experience getting people out of tax debt, whether it’s personal or business-related. We specialize in audits, Offer in Compromise, tax preparation, installment agreements, personal credit counseling and helping you re-establish your business credit. Read all of the services we have to offer here.

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How to Increase Sales Revenue and Keep Customers Happy

by Zach Haris

It can be challenging to increase sales revenue, but it’s not impossible.

Keeping profits high are the most important task of any organization.  Being able to consistently meet sales target and being able to increase sales revenue keep the lights on and hard-working staff employed.  Part of that equation though is always how a company can keep customers happy.  Despite a tough economy, you can increase sales revenue and keep customers happy with these tips.

Increase Sales Revenue Idea #1: Add Complementary Services to Existing Products
Businesses looking to increase sales revenue, one idea that can help you gain new clients is to offer a product or service that complements something you already offer.  For example, if the company you work for manufactures cookware consider adding cooking utensils or silverware.  In that scenario, if your customer is looking to buy your cookware, they would likely welcome the chance to possibly add cooking utensils to their online shopping cart.  If you need some ideas, look at your competitors’ websites and see what they offer.  Then take what they do, but do it better.

Increase Sales Revenue Idea #2: Enter Into Cooperative Sales Agreements
Using the sample from our first idea, if your company sell cookware seek out the organization that sells products like yours and request that they have the rights to also sell your products.  While it might take a while to find the right partner, it’s worth the effort.  At this point, if this is an idea that you proceed with be sure to work closely with your business development manager to ensure that you are contacting the right people and that the legal terms are satisfactory for both sides.

Increase Sales Revenue Idea #3: Raise or Lower Prices
The costs to your business to continue to fulfill your customers’ needs are constantly going up and down. As a result, you might be reluctant to potentially raise or lower your prices. Raising prices could increase sales revenue, but it also might lower prices due to customers being turned off by having to pay more for your products or services.  On the other hand, reducing prices might stimulate higher sales numbers and increased market share, but is that price sustainable in the long-term? Do your homework and check out what your competitors are doing as well, to ensure that your price is competitive to their prices.

Increase Sales Revenue Idea #4: Bundle Products
Consider looking at your products and services to see if you can bundle any of them together for your customers, at a cost savings of 10-25%. By putting this method of increasing sales revenue into place, you can potentially turn your customers or prospect into another product or service perhaps that they have never tried – and then might want to purchase again the future.

Increase Sales Revenue Idea #5: Add, Reduce, or Eliminate Shipping and Handling Charges
If your company prefers to not change prices, consider either lowering or offering free shipping on all orders above a certain dollar amount.  This approach can increase sales without the possible backlash of increasing prices.  Alternatively, could also add a shipping charge if you don’t already offer one to increase sales revenue.

Increase Sales Revenue Idea #6: Offer Special Discounts or Rebates
Who doesn’t like saving money?!  Offer a limited time discount of 20% or so on a product or service or possibly even a rebate that can be submitted and cashed in after a purchase.  This tactic demands the high level of marketing and promotion in order to be successful and profitable.  But when done right, it can increase sales revenue quite effectively.

Increase Sales Revenue Idea #7: Spruce Your Sales Collateral
Your sales collateral such as brochures, banners, overviews, product sheets, and presentations are often overlooked by business owners.  But consider this. If you’re the pieces that you are using to promote your products and services look old and have been used for years with little change, they likely won’t have much impact on being an effective part of the sales process.  Update them with the latest product information, bold professional images, and colors that attract attention while adhering to your brand guidelines.

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What Business Advisory Tools Do I Choose?

by Junita Jackson

With a growing number of business advisory software tools on and entering the accounting market, it is often difficult to know what to choose.

At Smithink we recommend following our EnablerTM Seven Step to Success process using the best software at the critical steps. It is not as easy as having one tool for each step. There are several great applications that can be used. In this article, we will look at some of the tools that are available for each step.

The first step in the EnablerTM process is preparing your firm to succeed with business advisory services. This is critical to the ongoing delivery of services and should include the appointment of a champion and analysis of the right clients to start with. Many firms are using Excel sheets and Word documents to plan out their service packages and strategies for implementation. Key to this step is the development of a Client Relationship Management (CRM) solution such as MYP's Arm and Arm Pro.

From there you need to unlock your client's business advisory needs with an interactive client needs analysis. This, in my opinion, is the most important step, as it will indicate where the client's strengths and weaknesses are, and allows a proposal to develop to address specific needs. Great cloud tools here include Cash Flow Story's simple four-chapter approach to business performance and My Yardstick What's Important to you (WITY) tool and E-Scope automated pricing system can assist here to understand client needs and develop innovative proposals.

The third step is to create a "disturbance" in your client's mind using business value assessments. Paramount to this step is establishing how much the client thinks their business is worth against the commercial value and linking this to the concept of a Business Value Gap (BVG). Some of the best applications here are Cash Flow Story's Business Value Indicator and Bastar's materials, tools and programs that will calculate a capitalization rate for the client's business off financial data and a risk and value assessment. Another new tool in this space to increase the sellability of your client's business is Sellability Score.

From there we introduce financial diagnostic software to fill the gaps by analyzing and managing the client's key macro drivers and results that will improve their financial performance. We will look at where the business is today, its strengths (green flags) and weaknesses (red flags) and where it can be in the future. There are many solutions here including Cash Flow Story's Power of One, PANALITX, Fathom and Profit Guardian.


Finally, generate new business by growing your business advisory specialization through profitable scenario planning and offering your "how would you like to see the financial impact of every business decision before you make it" service. This look into the future requires software that can simply show the client their pre and post position. Any of the financial diagnostic tools will adequately handle this task.

With this myriad of choices, a firm needs to be confident that they select the right application for their clients and staff.

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Asset Protection Planning

by Junita Jackson

Now that you are familiar with the most important asset protection and estate planning concepts how do you create the best plan? Protecting what you have from liability and preserving your estate for your family involves many new concepts for you and it’s not always easy deciding where to begin.

In this section, we will present a summary of the issues and options available-techniques to think about to frame the building of your overall plan. This is the approach we use with our clients to analyze their particular needs and to build an efficient program for asset protection, estate planning, and tax savings.

“Asset Protection and Estate Planning with the Family Savings Trust“

An increasingly popular tool used for asset protection and estate planning is known as The Family Savings Trust.  The term is broadly descriptive of a trust designed specifically to hold and protect a variety of assets against lawsuits and business risks.  It can be very flexible in form and allows for the accomplishment of most important asset protection and estate planning goals. 

“What is the Best Asset Protection Plan for Physicians?“

In our initial discussions with a client, these questions always come up “What’s the best asset protection plan?”  “Are there any plans which are completely bulletproof?”

Like any well-trained professional, I usually duck those kinds of direct and unconditional questions. After all, this is the legal system we’re talking about and when we compound the mixture of judges, jurors, and lawyers,  the results can be unexpected, to say the least.    Law is probably a lot like medicine in that respect.  So while we can’t honestly guarantee that the particular plan we design will produce the exact outcome we want, we do know what has happened before in similar situations.  If existing case law and legislation are clear and well developed then an asset protection plan that falls within the pre-set boundaries will have favorable and predictable results.

“Answers to Key Asset Protection Questions“

When I sit with clients to prepare or review their estate planning and asset protection goals a wide variety of questions and issues arise: What plan is most efficient? How are tax savings created?  How do we protect against the lawsuit and business risk?  Although I have addressed many these topics in detail in previous columns, here are a few starter questions which often arise and which may open the door for further thought and discussion. 

“Asset Protection: Needs Change Over Time“

The type of asset protection planning you need depends on where you are in your career. Because the amount and form of your investments and the particular risks you face will vary over time, your initial planning should be appropriately flexible and capable of adjusting to meet these changing needs. 

“When Is It Too Late For Asset Protection?”

One of the life’s ironies is that the worst time for asset protection planning is when you really feel like you need it the most. Although the law favors and encourages asset protection in most circumstances, there comes a point in financial transactions and legal proceedings when it is no longer permitted. In some cases, this boundary is clearly defined, but often the question of when the remedy of asset protection is still permissible is fuzzy. Experienced planners can follow several guidelines and make some educated guesses about where the line should be drawn in situations that physicians may encounter in their practice. 

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Do You Owe State Taxes?

by Megan Kunis

As a United States (US) citizen, everyone owes state taxes. The real question is: how many states do you owe?

Many people think that they are only obligated to pay state taxes in the state in which they reside. The truth is it’s possible to owe state taxes in multiple states. There are mainly two reasons why one would have to pay state taxes in multiple states:

  1. Relocation

Wherever you live in the US, each state has you recorded as a resident. If you were a homeowner or a renter, and/or collecting wages, that state has the record of you residing in there. Your duty as a US citizen, it is not only to pay federal taxes, but also the state taxes.

Think of it this way: If you’re residing in Florida, then you expect certain things to be well maintained like public parks and beaches. You expect the protection of law enforcement and firefighters to put out fires, the streets to be well taken care of, etc. Taxes take care of all of these things and as a residing citizen, you will be expected to pay your share, whether you own property or not.

So, if you live in Texas this year, but expect to move to Louisiana next month, then when the 2018 tax filing season approaches, you will be expected to file state taxes for both Texas and Louisiana. Now, there is a possibility that you may not have to pay any state taxes depending on how much was taken out of your paycheck throughout the year. In most cases, many people receive a state refund.

  1. Conducting business in that state.

As a business owner, it’s becoming quite common to take care of taxes in multiple states, especially with so many eCommerce businesses competing with each other. Whether you have a brick and mortar location in just one or several states, or selling a product in a state other than where you live, you may be obligated to pay sales tax on the item where you sold the product in. This means that you need to be informed about the different sales tax in each state that you conduct business in.

This is why a tax lawyer is so important to have on your team when conducting business on this level. Many business owners find out all too soon that they’re in over their head when it comes to conducting business in multiple states. While the business itself is the same, where they’re located may have to be operated slightly different according to the tax laws of that state. This might be intimidating for a business owner, but old hat to a seasoned tax lawyer.

Worlds Forum Taxation and Advisory not only have an experienced tax lawyer on hand to manage your business tax obligations, we also have professional tax preparers, and CPAs at your service.


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4 Different Types Of IRS Audits And How To Deal With Them

by Selina Stewart

Here’s what you need to know about different types of IRS audits and how to deal with them as a self-employed entrepreneur.

What is an IRS Audit?

An IRS audit is a thorough examination of your tax account and financial information to ensure that figures are reported correctly and that you’re adhering to tax laws. As tax returns are filed they are compared to the average figures for other accounts in this category.

If your figures seem to be elevated, or show anomalies, your return is put into a pool of other returns and randomly picked for more in-depth review by an experienced auditor. After a review, your return may be accepted and filed away, or the return is forwarded to an examining group for further analysis.

There are a few types of IRS audits:

  1. Correspondence Audit

A correspondence audit is the most common and simplest of the IRS auditing processes. The IRS will send you a letter in the mail requesting answers to specific questions or needed clarifications related to your tax return.

You will likely have to perform a correction of your tax return that may either result in paying in more money or receiving a refund for an accounting error. Either way, the correspondence letter will state the reason for the inquiry and often offer a simple resolution via an exchange of papers.

If you have data or receipts to back up specific claims, this is the time to send them in to help make your case. This type of audit is usually solved within a short time period once all the information has been collected. Be sure to keep copies of all correspondence in case anything comes into question again in the future.

  1. Office Audit

If the IRS has further questions about your return that extend beyond the normal correspondence letter, you’ll receive an invitation for an in-person audit meeting at one of their local offices.

This type of audit is a bit more serious than a correspondence audit and requires more of your time. However, an office audit is usually completed within one day since most information will be supplied on demand, and you’ll have time to supply any additional information that’s requested.

  1. Field Audit

A field audit is the most serious situation as the solutions to the issues could not be resolved with a simple letter or office visit. The IRS will visit your place of business and may look around to verify the legitimacy of your workplace, employees, and other business expenses.

It’s strongly encouraged, in the case of a field audit, that you hire a professional Enrolled Agent, tax professional, or CPA to be an advocate for you and your business. They will be able to answer questions on your behalf and ensure you’re getting fair processing.

  1. Random Reviews

In addition to traditional audits, you may be subject to a random review of your tax situation. The IRS isn’t looking for anything in particular when they perform these random reviews and will simply look at your return for inaccuracies.

These reviews are generally performed via a correspondence letter with notice that your account is being looked over. Usually, you won’t receive a follow-up letter if the review of the return doesn’t result in any red flags. In this case, you shouldn’t be too alarmed as the IRS agent isn’t looking for anything in particular.

How Far Back Can the IRS Audit?

The IRS tries to audit tax returns soon after they are filed, but can sometimes be as far back as the last three years. If there are additional errors or substantial mistakes, the IRS usually won’t go back more than the last six years.

To back up any business deductions, credits, and other income information, it’s recommended that you keep all tax receipts and information for at least seven years. Or in the case of an asset, save the records for as long as you own the asset, plus three additional years.

If you are notified you’re being audited, remain calm and have a talk with your tax professional. Usually, these situations resolve themselves quickly and easily so you likely don’t have anything to worry about.

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