For any law firm that is looking to make sure it maintains a strong reputation, fiscal prudence is vital. This means that the last thing you need is the reputational damage of a tax audit or a problem with the tax authorities. An IRS audit is very easy to activate, even when you think you are being above-board with everything. To help you make sure you don’t fall into the same trap as other law firms in the past, here are some suggestions for items to avoid messing around with.

These are common red flags that will surely trigger audits.

  • The most common mistake – and the one that is usually just a mistake, nothing more – is mathematical errors. If you don’t work with a CPA, then it can become (too) easy to make a mistake on the income you’ve earned. All income tax is checked via IRS computers, so a mathematical mistake can see you have a little friendly visit lined up. Always work with someone who can at the very least check the sums.
  • A failure to represent all of your income is another easy mistake to make. Many people do this and fail to report it all on their W-2 or their 1099 Forms. IRS computers will again look to match up all of the information with your numbers, and if they cannot then you’ll get a worrying letter through the door soon.
  • How you earn matters, too. if you have a few too many iffy sounding reasons for being paid X then you might get some questions as to what is going on. If your earnings reasons are a bit too far outside of the line of work that you supposedly offer, then you might need to do a bit of answering to the law in the near future.
  • Another reason, too, is to have a less than reputable tax preparer working with you. Ensure that any help that you bring in comes with a clean reputation. This can avoid you being audited just through guilt by association; if they helped you, then you must be doing something!

Keep this in mind and you can find it much easier to build a cohesive platform that is going to help you make a bit more progress than you thought you could just by hiring the right person. Don’t manage taxation alone, and ensure your assistance has a positive reputation.