Are You Audit-Proof? Take the Self-Assessment for Business Tax Safety

Facing an IRS audit doesn’t have to be scary. Use this 12-point audit-proof quiz (watch the video to take the quiz!) to assess your risk and build stronger tax habits starting today.

Why Audit-Proofing Matters for Business Owners

The IRS doesn’t audit randomly. They look for gaps, inconsistencies, and red flags.
According to Chris from Make Taxes Fair, the best way to avoid sleepless nights is to actively audit-proof your business through smart systems, good habits, and proactive awareness.

“What gets inspected gets respected,” says Chris.

1. Do You Have an Audit-Proof Mindset?

Audit readiness starts with routine behaviors:

• Keeping clean records

• Storing receipts

• Tracking expenses accurately

• Staying alert to audit triggers in your industry

These aren't chores—they're your shield.

2. How Often Do You Reconcile Your Books?

Monthly bookkeeping = audit protection.
If you’re reconciling only quarterly—or worse, annually—you’re exposing yourself to errors and IRS attention.

📊 Self-assessment scale:

• ✅ Monthly or more often

• ⚠️ Quarterly

• 🚫 Annually or not at all

3. Are You Keeping Receipts for Every Expense?

Receipts prove purpose—not just payment.
Bank and credit card statements don’t explain business relevance.

📝 Best practice:

• Digital or physical receipt storage

• Bills of sale for cash transactions

• No shoeboxes—organize and label!

4. Are You Practicing Proper Corporate Governance?

Forming an LLC isn’t enough. You must:

• Record major decisions

• Document reimbursement policies

• Formalize big purchases

• Create internal resolutions

Act like a real entity—and the IRS will treat you like one.

5. Are Business and Personal Finances Completely Separated?

Blurring personal and business expenses is one of the fastest ways to draw audit scrutiny.

✅ Best: Separate accounts, cards, and records
⚠️ Okay: Minor crossover (acknowledged + fixed)
🚫 Worst: Mixed and untracked

6. Do You Understand Deductibility Rules?

Ask yourself:

• Is this expense ordinary and necessary?

• Is it 100% for business?

• Would a tax auditor agree with your logic?

📌 Pro tip: Just because it can be deducted doesn’t mean it should be.

7. Are You Tracking Business Mileage and Vehicle Use?

Even 100% business vehicles must be logged.

🚗 Use a mileage tracker app
🛑 No log = deduction denied

8. Are You Engaging with Tax Strategy?

Do you understand your CPA’s strategy—or do you just trust them blindly?

The best audit-proof businesses:

• Ask questions

• Know their numbers

• Take ownership of their tax plans

9. Do You Understand Common IRS Audit Triggers?

Audit red flags include:

• High deductions without documentation

• Schedule C + high income

• Consistent losses over multiple years

• 100% business use of home or car

• Missing or late filings

Knowing these helps you steer clear.

10. How Do You Score? (Self-Assessment Tally)

Add up your points from the quiz:

• 30–39: Strong — You’re audit-ready

• 21–29: Fair — Improve weak spots

• 0–20: Vulnerable — Take urgent action

Final Thoughts: Proactive Beats Reactive

Audit-proofing isn’t about fear—it’s about confidence.

• ✅ Get organized

• ✅ Build routines

• ✅ Stay informed

• ✅ Ask smarter questions

• ✅ Document everything

These habits aren’t just tax protection—they’re business best practices.