If you’re in business, you have around a 1 in 100 chance of being audited by the IRS.  If you run a business from home, your chances go up about four times.  As long as you keep your books in good order, though, an audit is nothing to be scared of.  The IRS won’t audit you just to harass you.  They just want justification of certain items on your tax return.  There are two important things to do if you get audited, though, that can protect you and your business from undue problems.

1  – ALWAYS HAVE THE AUDIT TAKE PLACE AT THE IRS OFFICE! 

When the IRS notifies you that you will be audited, they will give you the choice of having the audit meeting at the IRS office, or your office.  Many business people think that they should have the audit in their own office, so they feel more comfortable.  This is the WRONG thing to do.  If you let the IRS agent into your office, you have given him or her the opportunity to view your whole operation.  They will definitely be looking for other things to question you about, besides the original audit item.  If you have the meeting at the IRS office, it forces the agent to focus on the original item.

2 – THE ONLY PAPERS YOU SHOULD TAKE WITH YOU ARE ONES DIRECTLY CONNECTED TO THE POINT OF CONTENTION!

The second thing you should do goes along with the first.  If the IRS has a problem with a certain deduction, say travel expenses, take the receipts that will back up the deduction, AND NO MORE!  If you take your complete set of business records, the agent is sure to take some time “looking for backup information” for your deduction.  In reality, they will be looking for other, unrelated items that don’t “look right”.  If you have the meeting in your office, they have every right to look through your files for the same things.

In other words, the smart thing to do is only give the IRS access to information regarding the items they are auditing you for.  They will let you know the reason for the audit beforehand.  This gives you the knowledge you need to protect yourself and your business from audit nightmares.

Leave a comment.  Have you had any experience with an IRS audit?

The IBM PC and IBM-compatible machines are the ultimate tools for the small business.  With a PC, you can instantly access individual records for your customers, write letters and marketing materials, keep track of your books, and more.  You can’t do it without software, though.  Software are the computer programs you need in order to do anything with your computer.  Unfortunately, most business software is quite expensive, into the hundreds of dollars.  There is a way, though, to get professional quality IBM computer software for $5 and less.  The software is a special type called SHAREWARE.

http://flickr.com/photos/jm3/

Shareware programs, in most cases, are distributed directly by the author of the program.  Why would they want to do this?  It is much easier for their program to get wide distribution if they do it themselves, rather than if they try to get a major company to produce and distribute it.  Many shareware programs are as good, if not better, than commercial programs (the ones you buy at a computer store).  What’s better, the pretty much unwritten rule in the shareware industry is that you shouldn’t charge more than $5 for a shareware disk.  If you know where to look, though, you can get the programs for FREE!

Shareware is meant to be shared, hence the name.  It’s ok for you to copy a shareware disk and give it to a friend, unlike commercially released programs, which are protected by copyright.  What this means, is that you can get PC-WRITE, a word processor that rivals WordPerfect, the industry leader, for free.  WordPerfect, on the other hand, costs over $400.  Other great shareware programs include FILE EXPRESS (a database, great for customer mailing lists, and inventory records) and AS-EASY-AS (a spreadsheet, for accounting and bookkeeping).  All these have the features of a professional program.

So, where can you get these programs?  There are dozens of shareware dealers like Public Brand Software (800-426-3475), which sell programs by the disk, usually for $5 per disk.  Some programs, like the ones mentioned above, are so big they come on more than one disk, and may be priced differently than single-disk programs.  For example, FILE EXPRESS comes on three disks, so it could cost $15, only because of the number of disks.

How can you get these programs for free?  First you’ll need a modem, which lets you connect your computer to the phone line.  Then, you’ll need a “terminal program,” which turns your computer into a terminal which can communicate over the phone.  The best terminal program to use would be QMODEM.

Call computer bulletin board services, which have programs you can “download” (transfer) through the phone line into your computer.  The best sources for these programs would be CompuServe (call 800-635-6225 to get a local phone number)

So, what’s the catch, you might ask.  Well, a shareware program is meant to be a trial program.  If you like the program, and use it a lot, you should REGISTER it with the author.  Registration is outlined in the program itself, or the documentation that comes on the disk.  You will have to send the author a payment, varying from as low as $5 to a high of $100 (very few are more than that).  For registering, you will usually get a package of items from the author than can only be gotten by registering.  This usually includes a copy of the latest version of the program, sometimes with extra features, and a printed instruction manual.  Other items might include free or low cost updates to the program when available, phone support from the author, or other programs the author has written.

It really is worth it to register the program.  After all, you’ve gotten the opportunity to inexpensively try the program to make sure it will fill your needs.  You will get a full-fledged software package at a much lower price than the commercial equivalent.  Also, you will be supporting the author, so he or she will be able to continue upgrading the program and/or writing new programs.  Registration fees are how the shareware author makes a living, and it’s unethical to use shareware permanently without registering.

With shareware, you get the best of both worlds.  You get to “try the software on for size,” without getting stuck with a $300 program you won’t use.  Once you find the program for you, you can register it and have a professional quality program that still cost a fraction of the competition’s programs.  Any way you look at it, shareware makes sense!

It is very tempting to play the lottery.  Just last week, there was a lottery in my area that had a grand prize of $110 Million!  What you could do with all that money.  Unfortunately, the odds of winning that prize were 1 in 54.9 Million.  In other words, you’d be more likely to get hit by lightning or die in a plane crash than win.  So, it’s really a sucker bet.  But, still, it’s fun to play.

Lots of people use “systems” to try to win.  They use birthdays, or they keep track of which numbers have already been picked, or any of the other systems out there.  Well, the bad news is, NONE OF THEM WORK.  I hate to break it to everyone, but there is NO way you can accurately predict which numbers will come up in a random drawing.

Let’s look at the most common way to “predict” lottery numbers.  This would be tracking.  People have kept track of lottery numbers for years, trying to establish a “pattern.”  Either they are looking for which numbers come up more often, or which have been neglected.  They use this information as a basis for the numbers they pick.  This just doesn’t work, though.

With the number of balls in a state lottery (usually 40 – 45), there are just too many different combinations of numbers to be able to predict which will come up, based on past performance.  Sure, the “law of averages” would say that the number 6 should come up soon, since it hasn’t been picked for 6 months.  However, you can’t say WHEN the 6 will come up.  You will probably find that 10 to 12 of the numbers haven’t been picked in some time.  This is NOT a pattern, this is randomness.  The other numbers will eventually be picked, but not all at once.

Playing by birthdays, addresses, or lucky numbers is the same.  The idea is that if you always play the same numbers, they will eventually come up.  In theory, this is true.  You may have to wait a few hundred, or even thousand, years, though, because of the shear number of combinations possible.

http://flickr.com/photos/denverjeffrey/

If you play the lottery consistently, you are bound to win SOMETHING, even if it’s a little prize.  This gives some people the misguided notion that their system works.  Actually, they were just lucky.  If you look at the statistics for those who win the lottery, you will find that most of them let the computer pick their numbers.  They played randomly.

I’m not writing this to try to make anyone feel stupid, or to tell them not to play the lottery.  I just get kind of disgusted when I see people selling the “secret systems” to win lotteries.  There is no system which works, so you are throwing your money away if you buy into any of this garbage.  I also hate to see people who take out a mortgage on their house to buy lottery tickets.  If you can’t afford to buy the tickets, you can’t afford to lose the money.  If you play the lottery, play it for fun.  That way you’ll never be disappointed.