If your business is facing an audit, don't panic -- plan for it.
The mere thought of an IRS audit will generally strike fear into any business owner. An IRS audit is generally an inquiry regarding part of a tax return to determine its accuracy and collect more tax if necessary. However, without proper audit planning, an inquiry can easily lead to an accusation of wrongdoing. You, the taxpayer, have the burden of proving that your return is accurate. There are numerous steps you can take to minimize the risk of having a tax assessed after the audit.
Higher wages. As you may guess, when your income increases, so do the chances of being audited. There are a couple of reasons for this. First, many individuals and businesses that earn large amounts of money have a tendency to inflate their deductions to reduce their income. Second, because the taxpayer makes more money, his or her tax bill is higher and the government feels it has a better chance of collecting more tax from a high-income producer.