How to Get Your Small Business Audited

By Jon Hosier

I know it’s a weird title, but it got your attention right? So for 98% of the population (Well, those who pay taxes anyway.) we try to avoid being audited. A few years back I filed by hand and mailed it in. No double check and no software to tell me I botched the form.

Life resumed its daily norms. The wonderful news came some weeks later. The envelope bore the auspicious seal of The U.S. Department of Treasury, Internal Revenue Service. Page one of eight somewhere in the middle the message flew out at me: “Summary of Proposed Changes.” You owe us $2,300. Plus interest. And by the way you have a month to pay. Let me just preface the rest of this article by saying I have not filed since without the use of any of the available tax preparation software out there. In any case, an error of math and overstated business expenses did me in.


If you want to join in the audit fun, by all means file by hand. The chance of messing up is higher and you even get the joy of waiting longer for a return. The best ways to get audited are generally the simplest.

Here’s the whole list:

– Claim no profits years in a row or claim a large net loss for one year

– Make your business look like a glorified hobby; very low revenues can mean no deductions (ie. selling on eBay)

– File a return by hand. Make it as sloppy as possible. In the age of eFiling, there is nothing a IRS agent likes more that a poorly formed statement.

– Go really streamlined. Leave boxes blank.

– Claim random expenses. (ie. local septic company claiming flight to Bahamas as business travel expense)

– Write it off. (It’s so much fun. Like Russian Roulette. See if they just won’t notice that obnoxious insurance premium…)

– Claim the golf, cell phones, flat screens, meals, travel and iPods. (The boys at the IRS don’t know what fun is anyways)

– File that Schedule C with more than $100k. (The rate of audit for these cases keeps increasing)

– Round everything. (This goes hand in hand with #4. Don’t even try to make stuff up.)

Bear in mind that only about 25% of those audited actually get off scott free. My advice? Use a freaking tax preparation software like TaxAct or bring your documents to H&R Block.

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