Linda Artesani covers QuickBooks moves that reduce audit risk. Meals are only 50% deductible, vehicle expenses require choosing between actual costs or mileage rate (not both), and S-corp owners must pay themselves a regular salary, not just draws. Home office deductions often trigger audits.
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Would you like to have tea and cookies with the IRS? Um, I think I'll pass on that invite. Hi there, Linda Artesani, Artesani Bookkeeping. This week's blog post is all about things you can do with your QuickBooks, with your data in your QuickBooks file to make sure that you lessen the chances for an audit. So anytime you hear the word audit, everybody kind of freezes and says, oh, I don't want an audit, right? So there's things you can do. To help mitigate the chances of that happening. And there are just certain places I see in client files all the time. This is the cleanup season. So the files come in and I see things that I'm like, oh boy, here we go. Meals and entertainment is one of them. It's a place that I've seen people put taking the client to the movies. There's no more of that allowed. Hasn't been around. I think last year was the first year that they stopped doing that. So that's a place that you want to check and make sure that the meals are in fact Meals where you took a client out to entertain them to try to get the business. You only get to write off half of that. In fact, I recommend opening that account. It comes in by default, meals and entertainment, and just renaming it meals at 50% because a lot of people don't realize that you only get the half off. I've had a couple clients come to me and say, I only get half. Can you move some of that into advertising and promotion? No. Another place that is an area of concern that will trigger an audit is auto. So if you have an auto, if you have a lease or a loan, the loan has to be in the business name. That typically will make your insurance costs go up. I've also seen some clients that try to write off the gas and write off the The repairs and maintenance on their vehicle, and then they take mileage. No, you can't have both. You can't have both. There's other places that I've seen on the files where it could trigger an audit. In fact, my own accountant, my tax professional, he doesn't let me take the business write-off of the office. And that's— home office is one of those areas that, you know, when I started adding up, I decided not to argue the fact that I live in this room and I'm here all the time and working. But he just thinks that that will trigger a red flag. So there's more in my blog post if you wanna go down and read it and check it out. I would love you to do that and see the other areas of concern that we find. And I'd love if you could post, if you see this post in social media, I would love to see if you've had some horror stories. I'd love to hear them of things that clients have asked you to do. And I've had a couple where there's been some unusual things in a file where the client will ask me to create a client gift account and the things really probably weren't gifts. Gifts to the client. So there's been some times I've received some things. One thing to note too, before I end this video, is I've had it happen where a client will come to me and I find out that they're an S corp— they're an LLC that acts as an S corp— and I don't find that out right away. Typically I get the tax return and I see it. You have to take reasonable compensation. You have to take a reasonable salary if you are an S corp or an LLC that acts as an S corp. That's Super important. So that's another area that you probably need to really target and get into. If you're not taking salary and you're only taking draws, and that's typically what I will see as an accountant, I will see that the person's taking draws and they're not taking a reasonable pay, or they take a pay here and then maybe the cash flow is not so well. So they stop and don't take a pay and then they take it down the road. You have to make it regular. You have to make it every month. Once a month is plenty. But as long as you're showing that you've got regular pay, you're not playing any games because those are the things that trigger an audit. So on that note, I hope everybody's having a happy tax season. Hope this was a helpful video and stay tuned for more. Thanks. Bye.
