| When that nasty letter arrives from the IRS or your | | | | wife's clothing and trips to Europe among many other |
| state's auditing division informing you that an audit is on | | | | potential issues. We had a potential problem. We made |
| the way, how do you respond? I'll take care of it | | | | sure that the sample homes had closets filled with |
| myself with my internal staff? I call my accountant and | | | | clothing, that the trips had some documented |
| fax over the notice? Ignore it, and hope it's forgotten? | | | | relationship to their home design and to the furnishings |
| Regardless of whether or not you are concerned with | | | | of the sample. We had a strategy of giving the auditor |
| IRS deductions/income, sales/use tax, or employment | | | | a tour of the models, then worked off site at the |
| issues, it'll be the best use of your time and money to | | | | accountant's office. In the end, the issues were still the |
| request your qualified accountant to conduct a | | | | issues, but the client received a "no change", not |
| thorough "pre-audit" of the years to be reviewed...and | | | | because of lies or destroying documents, but by |
| potentially the subsequent and previous years should | | | | preparation, designed work flow, and by providing |
| you have a consistent potential exposure. | | | | pre-prepared documentation. |
| A thorough "pre-audit" will identify potential tax causing | | | | When you "skim" cash in substantial amounts, run your |
| exposures, allow you and your accountant the time to | | | | new home through the cost of goods sold (or in one |
| prepare documentation to support your issue (if found), | | | | case a yacht), buy expensive jewelry for your spouse, |
| create a strategy for the audit to mitigate the potential | | | | take little salary or distributions and run all of your |
| issues during the governmental review. When the | | | | personal expenses through the company, you run the |
| auditor sees that your information is out of control, | | | | risk of fraud, enormous penalties, back and forward |
| disorganized, can't answer questions, they just seem | | | | interest, or potentially litigation and/or jail time, and |
| to laser in on their work. If they see documentation | | | | personal and business embarrassment or ruin. There |
| prepared, it's organized, they have a place to work | | | | are so very many ways to avoid taxes, defer income |
| with your accountant present (at all times) - not the | | | | taxes and to maximize deductions. In the end, the |
| owner- either at the accountant's office or your place | | | | combined tax rates (state, local, federal) of the worst |
| of business (preferably the accountant's office), there | | | | taxing parts of the country are still under 50%. Best |
| is a greater chance of success. | | | | advice - learn how to make more money so that the |
| 20 years ago, I represented a large residential | | | | taxes almost become irrelevant. |
| development and construction company. In pre-audit | | | | Look for tips in this and future newsletters on HOW |
| we found a number of personal items such as his | | | | TO MAKE MORE MONEY on your current activities. |