No one likes to be audited by the IRS. See why operating your practice as a corporation could lessen the risk.
Q: Am I more likely to be audited if I operate my practice as a professional corporation or as a sole proprietorship?
By contrast, a professional corporation with gross revenues of less than $1 million is considered a "small fish" and has an audit risk of approximately 1%, which is about the same as the overall population. Starting in April, however, the Internal Revenue Service (IRS) will be performing random audits on about 2,500 small corporations around the country so that it can update the secret formulas used to select which returns to audit. The IRS will be examining tax returns from the 2010 corporate year.
Answers to our readers' questions were provided by Medical Economics editorial consultant David J. Schiller, JD, Schiller Law Associates, Norristown, Pennsylvania. Send your money management questions to firstname.lastname@example.org Also engage at http://www.twitter.com/MedEconomics and http://www.facebook.com/MedicalEconomics.