Business Income Red Flags to Watch For

Stay ahead of mistakes that could attract the IRS

Nobody wants a surprise letter from the IRS. Even if you’re doing nothing wrong, certain income-related issues can draw unwanted attention. Here are some of the most common red flags we see — and how to avoid them:

🌳 Forgetting side or payment app income
Platforms like Stripe, PayPal, Venmo, and Square now report your income. If you only track what hits your main bank account, it’s easy to miss something.

🌳 Deposits don’t match sales
If your bank shows more (or less) than what you report as sales, it can look like underreporting — even if it’s just sloppy tracking.

🌳 High deductions with low income
Claiming big write-offs while showing very little revenue can raise questions. Make sure your numbers reflect your real business activity.

🌳 Numbers swing wildly year to year
Sudden spikes or drops without explanation can catch attention. Good records help you tell the story behind the numbers.

🌳 Mixing personal and business funds
Depositing personal money into your business account (or vice versa) without documentation makes your books messy and hard to defend.

🌳 Inconsistent reporting
Your tax return, bookkeeping, and other filings should all match. Discrepancies can lead to unnecessary scrutiny.

🌳 Cash-heavy business with poor tracking
If you handle a lot of cash (like hospitality, beauty, or retail), the IRS pays closer attention. Detailed logs and consistent records are key.

When the numbers aren’t clear, it can look worse than it is. That’s where we come in. Let’s clean up your books and make sure they’re audit-ready — so you can move forward with confidence.