The Vice Chair of the California Board of Equalization or BOE often conducts seminars for small business professionals to help them to avoid tax issues with the powerful California taxation authority. He makes several appropriate suggestions:
1. Keep All Business Receipts and Records for 4 Years. If you hold a California Seller’s permit you are required to keep copies of all supporting receipts, documentation and information for four years in case of an audit. He recommends that small business people double this to eight years in order to play things safe.
2. Don’t Guess. Get Written Advice. Many California businesss fail to accurately report income or complete tax returns because they are unsure how to classify income or expenses. If you have specific questions about whether an item is taxable or deductable he encourages people to request written clarification from the BOE.
While this is sound advice on the face of things, it is also a risk to business owners. Contacting the BOE or IRS regarding a taxation question can raise flags and may invite a closer look, instead of the clarification you seek.
This is why it is important to work with the experienced California and IRS tax team at Allen Barron. If you have questions regarding the classification of income or expenses we invite you to contact us for a free consultation at 866-631-3470. Learn about the protections of the attorney-client privilege and how we are able to help our business clients to maximize tax savings while ensuring accuracy and reducing audit risk.
