Another thing that can be on the radar from the IRS does not necessarily come at any great surprise.  Nor is it a surprise that this is getting looked at a bit more closely.

It’s separating the personal side from the business side.

The IRS wants to make sure that personal expenses are not being run through the company and being taken as an expense to reduce the money owed to the IRS.

What would be some of the areas that the IRS might look for:

1.  Travel and entertainment.  You want to make sure that the travel has some legitimate business purposes and that while on the trip that personal expenses aren’t run through.

2.  Meals and entertainment expenses.  Do these reflect a real business purpose?  Is there adequate documentation for it?

3.  Vehicle expenses.  Is the mileage reported being used for business purposes?  Have the commuting miles and personal mileage been separated out?  Is there adequate documentation?

4.  Other expenses.  This could include things, such as club memberships.

It’s not a surprise this is a common area that the IRS will continue to look at and it’s not sort of the end of the world if something happens to be found there.  The thing is little things are okay, but you want to make sure that there’s not a lot of big stuff running through.  The better your documentation, the better you’ll be able to get through and make sure you have pretty clear practices.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value