When someone submits a Schedule C form with regards to their income tax return, they might as well put a big red sign on their tax return that says please audit me. Such a form will significantly increase the risk of an audit and if you are not ready to deal with it can turn out to be a costly experience. The IRS has increased the number of employees whose work focuses solely on audit tax returns submitted with a Schedule C form during the tax relief schedule. If you want to beat an audit, the best way is not to be chosen for one.
The most important thing to remember when you want to avoid an audit is to have an appropriate business code on your form. Each business is obliged to put a business code on their form and IRS uses such codes to match up the deductions on the Schedule C to examine whether they correspond with the national average or not.
For instance, a bookkeeper should use the 541219 code. If he then deducts $3,000 in such areas as entertainment and promotional, the IRS will inevitable ask why does a bookkeeper spend so much money on entertainment? On the other hand a person involved in a sales business would be fine with such deductions.
The last important element is paying attention to what you deduct for truck and auto expenses. Each vehicle must have its mileage log for the purpose of a tax relief schedule. This applies for all vehicles leased and owned. This is justified by the fact that you must be able to present the exact business usage of a vehicle to the IRS. If you can’t meet specific requirements you should never declare 100% business usage of your vehicle.