I have a small retail business with 50% cash transactions of small values. Can Ijust what I think I owe the IRS, instead of doing complicated and time consumingdetailed record keeping? My idea is let the auditor figure out whether I amunderpaying my taxes.. I am sure my guestimate will be within 80% of what I doowe. So I doubt an auditor will find anything worth their time to collect extra.

It's not hard. You don't have to list individual transactions. Have one bank account where you put all income into, and from which you pay all business bills. Let the bank do most of the work to keep track.If you don't do what you are supposed to, and can't prove what happened, they may tax you on all your gross income from the business without allowing any deductions. That could hurt.___Stu

Consequences of doing no record keeping?

Sep 04, 2012 23 Replies

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paulthomascpa 13 years ago

"Homer Simpson" wrote

A "high estimate" of your income is whatever you put into the bank + for any claimed cash expenditures. Said cash expenses not being allowed due to your inability to keep records (ie: unable to prove).

In an audit they'll not add up your records for you. They'll verify that the amount you reported for a claimed expense has support. No support? Then you get $0 deduction. After about three or four of those, they zero all claimed expenses and close the audit. Additional taxes, penalties and interest.

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Stuart A. Bronstein 13 years ago

I suspect that he asked an actual question and wanted to validate his own very clueless and incorrect analysis. But he's just too lazy to want to do things the right way, and too clueless to think that he may not have all the answers.

___ Stu

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Seth 13 years ago

What "meticulous record keeping" is required to record, at the end of each day, the total cash sales for that day?

If you don't, the auditor might well estimate the numbers, and you won't like the results.

Seth

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Don Priebe 13 years ago

sound so negative and doomsday.

That's because everyone here is responding in accordance with the laws as written. We cannot advocate making up a return or playing the audit lottery no matter how "efficient or cost-effective" that procedure may be.

Can you make up numbers to make your Schedule C look right? Certainly. Will you get caught? Probably not. Is it legal? No. Will anyone here assist you in the false filing? I sure hope not.

Don Priebe EA in Upstate NY

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