What do Martha Stewart, Mike Tyson, Nicholas Cage all have in common?
Okay fine, I’ll just tell you. They’ve all been audited by the IRS…and each got in deep $$$ trouble.
As a business owner, the thought of doing your taxes wrong and finding out you owe the IRS tons of money can literally keep you up at night. Of course, the best way to ensure this never happens is if you invest in a quality accountant…but I digress.
Making a mistake on your taxes isn’t the death sentence that it seems to be. It’s all relative. Depending on the mistake, who finds it, and when you find out can determine what happens to you and your business.
There’s a difference between willfully evading taxes and making an honest mistake. The IRS can tell the difference.
If you realize you made a mistake after filing, go ahead and file an amended return. No harm, no foul.
If the IRS realizes you made a mistake when processing your return, they will send you a notice. They will tell you EXACTLY what you need to do in a certain time frame to fix your mistake. If you’re compliant, there shouldn’t be any issues.
However, this is the time I’d say find an accountant. If you haven’t worked with an accountant and you receive IRS notices related to your business, then consider it MANDATORY to seek an accountant. Or get a new one if your current accountant has been consistently slacking. Because depending on the error, you could owe a huge tax bill and you need an expert to help you get out of this mess and to keep you out of future mess.
Here’s the tricky part though. If the mistake isn’t found by either you or the IRS until years in the future then you could be in a boatload of money trouble. Why? Because interest and penalties on any owed balance will continue to accrue and you’d be responsible to pay not just the tax but also the interest and penalties. You don’t want these problems.
So long story short, the IRS is scary AF but a good accountant will keep them at bay.
Cheers to more money in our pockets,