Episode 632: How to Survive an IRS Audit and Which Red Flags to Look Out For with Ansley Beutler

EBT632 – Ansley Beutler

Intro 00:00

Food bloggers. Hi, how are you today? Thank you so much for tuning in to the Eat Blog Talk podcast. This is the place for food bloggers to get information and inspiration to accelerate your blog’s growth, and ultimately help you to achieve your freedom. Whether that’s financial, personal, or professional. I’m Megan Porta. I have been a food blogger for 13 years, so I understand how isolating food blogging can be. I’m on a mission to motivate, inspire, and most importantly, let each and every food blogger, including you, know that you are heard and supported. 

Supercut  00:37

You are going to want to download our bonus supercut that gives you all the information you need to grow your Instagram account. Go to eatblogtalk.com/Instagrowth to download today. 

Megan Porta  00:52

If you have ever wondered what it might be like to experience an IRS audit, or maybe you are looking to avoid an IRS audit in the future for your small business. Tune into this episode. It’s such a juicy one. Ansley Beutler, she’s the blogger at The Fit Peach, and a CPA at Peach Perfect Financials joins me in this interview. We have such a great discussion. I loved getting Ansley’s perspective as a CPA about why a small business might get audited and how likely it is. And I don’t know if you know this about me, but I have been audited recently by the IRS, so I talk about my experience going through that I get into all the nitty gritty what the outcome was, and honestly, how emotionally draining it was. So if you can avoid an audit, I would say definitely do so. Ansley’s perspective is super valuable and adds so much to what my experience was going through it. I hope you find massive value in this episode. It is number 632 sponsored by RankIQ.

Sponsor  01:55

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Megan Porta  02:59

Ansley launched her blog, The Fit Peach, in 2018, sharing simple, family-friendly recipes that prove healthy eating can be both delicious and approachable. Her passion for flavor-packed, wholesome meals quickly resonated with a growing community of home cooks and wellness-minded individuals. Building on her experience as a CPA and her firsthand knowledge of running a successful blog, Ansley founded Peach Perfect Financials—a boutique accounting firm dedicated to empowering creative entrepreneurs. Specializing in bloggers and content creators, her firm offers tailored financial services, including bookkeeping, tax planning, and retirement strategies. With a unique blend of professional expertise and industry insight, Ansley helps entrepreneurs navigate the financial challenges of self-employment, enabling them to focus on what they love: growing their business.

Megan Porta  03:51

Ansley, I’m so happy to have you back on the podcast. It’s been a couple of years, but welcome back. Thank you so much for having me. Yeah, in Skype, when I log in, it shows me our last conversation. I think it was August of 2021 oh my gosh. That seems forever ago. I don’t even know what we talked about back then. Bookkeeping or…?

Ansley Beutler  04:11

Yeah, probably Yeah, like a lifetime ago. Yeah, wow.

Megan Porta  04:15

I know it’s forever ago, but today we’re going to talk about something super exciting IRS audits, something everyone wants to talk about, right? I’ve had an audit myself, and I had a listener reach out and just say, Megan, it would be awesome if you shared your experience. And I thought it would be really great to have you here, since you are a CPA. So thank you for joining us Ansley. Before we get to IRS audits, do you have another fun fact to share with us?

Ansley Beutler  04:43

Yes, so I this is like one that’s coming up. Actually, this weekend, my family and I are going to be driving to Quebec, Canada to kind of go visit some like, holiday markets. It’s supposed to be a really nice town for the holidays or expecting snow and all of that, it’s only like, a four hour, four or five hour drive from Boston. And I have never, like, driven over a border like that before, so we’re doing that this weekend. I’m very excited about it. 

Megan Porta  05:12

Oh, that sounds cozy, and just Yeah. So holiday ish and lovely. I hope you have a wonderful time. I love it. Thank you. Yeah. So since it’s been a while, do you want to refresh everyone just who you are? I know you’re a blogger. You’re also a CPA. Just tell us all about all of that. 

Ansley Beutler  05:29

Yes. So I started a food blog as a bit of a hobby, almost like many bloggers, about five, six years ago, when I was working in public accounting, and very quickly realized that it could actually be a pretty lucrative job. I could at the time, I saw other people that were doing it full time, and I kind of just set my eyes on that, knowing that, kind of realizing that I didn’t want to be in public accounting for the next 30 years. And so when I made the switch to becoming a full time food blogger. It took a few weeks, maybe a month or two, where I was kind of making some friends in the industry, and the accounting question started when they figure out your CPA, you know, can you help me with this? And can I write this off? How do I deal with groceries and all of that? And I kind of found this neat little niche where I felt like I could, I was really helping people that were doing the same thing that I was, and trying to build a business for themselves, maybe trying to have a more flexible lifestyle, and all of that. And it’s just kind of grown ever since. And it’s, it’s been very fulfilling, and it’s an area of accounting that I very much am passionate about, and it’s kind of evolved into this Peach Perfect Financials. I call it a, like a boutique accounting firm that’s kind of geared specifically for I call them creatives. So bloggers, influencers, anyone that’s kind of in that, like creative space online, that’s who we help. So I kind of do that alongside my food blog. I still do the food blog as well full time. I have contractors on both sides that kind of helped me with a lot of the stuff, getting the, you know, photographs up on the blog, and the blog post writing, and the Pinterest thing and all that other sort of stuff. So I’ve kind of contracted a lot of it out, so I can kind of be in two places at once. That’s what it seems like.

Megan Porta  07:18

Yeah, that’s amazing. So impressive. I didn’t know you were actively running your food blog too. I love that. And then I think your perspective, just having a food blog is so valuable, and then being a CPA and offering that to other creatives, I love that. I can see where people would jump all over that. 

Ansley Beutler  07:37

Yes, yes, yeah. I like to say I like speak both languages, one of the common like trends that I see when I talk to people is that they have accountants that maybe don’t understand what they do, and I feel like that’s as your business is growing, it’s so key to find someone that understands what you do, because that’s how they are able to direct you with expenses that are going to be valid, and maybe Some other opportunities that you have to reduce taxes and stuff like that, if they don’t know what you do, it’s very difficult to do that. 

Megan Porta  08:06

Yeah, I hear that all the time too. People are like, I my CPA does not understand my job, and you want your CPA to understand your job, because I think this kind of leads into our conversation about audits. If your CPA doesn’t understand your job, that things might be filed wrong, and that might be a red flag. So yeah, let’s get into that. Why might a small business, like a food blogging business, get audited in the first place?

Ansley Beutler  08:31

Yeah. So first off, with with audits. If you have like, a w2 job, if you have the tax return that has like, just w2 income, it’s going to be pretty rare to to have something like that audited because it’s been run through a payroll processor. I mean, you’re basically paid a paycheck. Your employer has dealt with remitting withholdings and all the different taxes that come out of said paycheck. And it’s going to be pretty difficult to audit that, because the numbers are, what they are almost now, if you have a tax return where someone is reporting like a Schedule C business income, there is none of that. It’s up to that person to provide what their gross receipts were, as well as all of the expenses. And when it comes to gross receipts, meaning like revenue, how much money the business has made. The IRS actually does have a little bit of an idea about what that number should be with the form of 1099s. So if you’re on MediaVine and you make $40,000 on an ad revenue, MediaVine is going to send a 1099 is the form, and they’re going to send one to you, to let you know that that’s, that’s the income that they’ve reported. But they’re also going to send one to the IRS. So the IRS has some sort of idea about what that that number should be. What they don’t know are all of the expenses, and that’s where they’re going to hone in on, specifically on small business owners, because they want to make sure that people are not. taking advantage of the system, because it’s kind of up to the business owner to report those expenses. Like I said, they’re going to know what the what the revenue side is, but they don’t know what the expense side is, and most businesses are going to have a slew of expenses to operate, and so they’re really going to dial in on those expenses to make sure that they’re valid. They’re nothing out of the ordinary or anything like that. So no matter what type of business you are, do you have a schedule C, or if you’re an S corp and you have 1120 s, the IRS system is going to dial in on those expenses and kind of do some analysis in their back end to make sure that they’re within, like, a reasonable range. So that’s what’s happening with the small businesses. And it’s because of those, those bucket of expenses that they have no other way to really analyze if they’re valid, other than doing a bunch of statistics with what industry you’re in and figuring out, like, if a food blogger has $40,000 in income and $30,000 in I don’t know, like travel expenses, and you’re a food blogger, they may, they may raise some questions, where are you going, and where are you traveling to, and maybe should that have been in supplies or software or something like that. And so they’re going to ask you about that, probably. But just having a small business and having one of those types of tax returns is going to open the door a little bit to just maybe the IRS doing a little bit of a double check in the back end that things look reasonable. 

Ansley Beutler  11:28

Okay, yeah, that’s interesting. Is there a certain percentage, or, I don’t know, something that comes to mind as far as income versus expenses, like your example, if you’re making $40,000 from an ad network and your expenses are 30,000 that’s, I mean, that’s over half. So that’s kind of that could be a red flag in itself.

Ansley Beutler  11:52

Yes, yep. I mean, there are. So there are a few things. One I recommend really understanding what your NAICS code is. This is the North American Industry Classification System. That’s what it’s long for. But it’s the n, a, i, c, S code, and it’s very often overlooked because there is no code that says I’m a blogger or I’m an influencer. This is the code. If you have a schedule C business, you usually cannot file your tax return. You get an error unless you input what that industry code is. And that is actually a very important code. That is what the IRS, they have a certain, you know, statistics in their back end, again, for every type of industry. So if you key in a code that’s for medical you’re in a medical industry, they’re going to probably think the insurance is going to be pretty high. They’re probably going to think the labor contractors or employees is going to be pretty high. They’re probably are not expecting a lot of travel with a medical field and so on and so forth. So they have different statistics that they run based on everyone else who’s has submitted something, a, you know, a profit and loss in the medical field over the last whatever, 20 years. I mean, it’s like a statistical analysis that’s like, bigger than I can even probably describe. And so figuring out what your NAICS code is is really important. I’ll go ahead and tell you. The one that I use for almost everybody. Is one for independent artists, writers, and it kind of falls into publishers. So if you publish recipes online, you’re going to fall into, like independent writers. Basically the code is 711510, is the one that I use. I literally have it ingrained in my brain, because that’s most bloggers are going to fall into influencers can fall into that too. It’s actually like celebrities can fall in there as well. And so it’s a little bit of kind of like an interesting industry, I’m assuming, but they know that based on the different types of expenses that people are recording when you key in that code. So definitely make sure. I know that’s like a very weird thing to mention, but it is actually really important. It’s commonly overlooked when you are either preparing your tax return with, like a turbo tax or a tax act, or if you go to, like an H R Block, and you know, Megan, I was chatting about this beforehand, about, you know, accountants not understanding what you do. If the H R Block accountant doesn’t know what you do, you need to make sure that they have the right industry coded in there, or they may erroneously flip off some sort of error, because your expenses aren’t aligned with another whatever industry they actually input. So that’s probably my first recommendation, to just kind of defer even the thought of an audit is make sure that that code is accurate.

Megan Porta  14:42

Oh, gosh, I didn’t even know about the code. I’m gonna ask my CPA, right away. 

Ansley Beutler  14:46

Yeah. I’ve seen, like, I mean, like, there are maybe, like, two or three that a blogger could fit into. The one that I just use is 711 510, I’ve seen a lot of other comments use that one. It’s just kind of a little bit of a catch all for, like, independent writers. And so the other thing, because you mentioned, like, is there an amount of expenses, or something like that, it actually has to do with the profit margins. And I will say, I think bloggers are actually given a little bit of low leg up here, because bloggers typically have a pretty high profit margin. And this means that it typically doesn’t cost a whole lot to to make money blogging, whereas other things manufacturing companies, if you own a clothing store, I mean anything where you’re dealing with a physical product, you’re going to have, you’re going to have much lower profit margins. And the statistics are going to catch something in with the IRS, when the profit margins are very slim, and it’s going to be like, hey, this person has a 2% profit margin. At least they’re claiming that, which means they’re only like their profit is only 2% of their revenue. That’s what a 2% profit margin looks like. And they’re in this industry, and everyone else in the industry has a 40% profit margin. So something’s off here. This person’s claiming way more expenses than everyone else in that industry. And so thankfully for bloggers, we have pretty high profit margins to begin with, inherently. And so a lot of times we’re not really going to deal with those really low profit margins. Now, if you’re just starting out, that is normal, and the IRS knows that the first few years you’re in business, you’re probably going to have lower profit margins, maybe even negative profit margins. That’s common, but I’m sure that people have heard of hey, after three years, you need to start making a profit. So the IRS thinks that you’re a viable business. That’s why. So if you’re on year five and you still have negative profit, you may be flipping off some some flags just because you’re keying in the blogger industry code, and bloggers typically have larger profit margins. The IRS may say, Hey, this is the fifth year in a row that this person has filed a business return, and they’re still have they’re still not turning an actual profit. That’s reasonable. We’re going to go ask them about it and stuff like that. So it has to do with that, how much in expenses relative to the to the revenue, that profit margin is going to be what they’re looking at.

Megan Porta  17:04

Okay, that makes sense. So the longer you’re in business, the more likely you will be turning a profit. And so it could be a red flag if you’re not, yes, yeah. Okay, what other things could be red flags for small businesses?

Ansley Beutler  17:18

Yeah? So I mean anything in like, again, if you’re using an expense that maybe is not common and it’s substantial, that’s going to be a bit of a red flag. You may be asked about that with S corps, and this is a big one that has been highlighted in the news and all of that with S corps, because for a pretty long time, a lot of people were converting to S corps and then not running a salary for themselves. I doubt a lot of it was malicious. I’m sure maybe some of it was but that was a common thing, just because with the evolution of the S corp, it’s been around since the 90s, and they’re just now kind of cracking down on it. So if you are an S corp, you really need to make sure that you’re running a salary for yourself. And that’s going to be the biggest red flag. Is if you have zero wages that are being reported on that tax return, that’s going to be a bit of a red flag. And then if those wages are too low. So if an S corp has, you know, $100,000 in profit, the IRS is not going to want to see a $5,000 salary. They’re going to want something a little bit more reasonable. So that’s another thing specifically with S corps.

Megan Porta  18:23

to look out for, what’s a reasonable percentage for salary?

Ansley Beutler  18:27

So this is going to change from person to person, but roughly, I like to see about a 50/50, split. So again, if you have $100,000 in profit, I like to see maybe 50,000 run through salary and 50 through profit. Again, that can kind of swing either way, like if someone is maybe only part time working on their blog, and maybe they’re a stay at home mom, and they deal with kid stuff, and they take the summers off and all of that, you could probably walk it back a little bit. So maybe $40,000 salary or $30,000 salary, and then kind of shuffle some more over to the profit side. If you’re not doing it full time. However, if you have an employee and you pay them $60,000 a year, you should not be paid less than your employee. So you’re going to want to up that salary to be more than your employee. So it’s going to change a little bit. But most accountants are going to kind of want to see that 50/50, ratio, maybe a 4060, ratio,

Megan Porta  19:23

Okay, and then if you just increase your income substantially, can that be a red flag as well from year to year? 

Ansley Beutler  19:31

I mean, it could be. But with those 1090, nines, the the IRS is going to know where that, where that, where that came from. And honestly, the IRS doesn’t care that that the income got bigger. They’re going to care if they got substantially smaller. And so maybe if there’s like an anomaly of a year and you made $500,000 because you got some, some really nice, big book deal in 2024 and then next year you had the book tour and all of these expenses. You reported a $50,000 profit. That may throw up a little bit of a red flag, but the year that you reported 500 is not too much going to be be throwing up a red flag, because they’re going to have that 1099, and they’re going to know where that income is from. They’re mainly going to be looking at those expenses.

Megan Porta  20:16

Okay, anything else that could be a red flag?

Ansley Beutler  20:18

I mean, the other thing I can think of is just, you know, not filing a return, if you’re not filing it on time, or if you’re late, that that is going to flip off a red flag, just because you’re going to be kind of in that other bucket of returns that were filed late. So that could definitely be something as well. And then, just like jumping around from from business to business as well. Again, if you have a schedule C like longevity of having a blog and you’ve been reporting on your tax return for, you know, 10 plus years is going to maybe show that you’re a valid business and you’ve been operating for a while. But if you have one business one year, and another business another year, and then you kind of ping pong and flip back around, that can also be a little bit of a sign that, Hey, someone is continuing to start businesses and push a bunch of expenses over here, and then they’re going to close it down and start another business. So longevity is kind of good when it comes to the IRS, where they kind of know your business, and by, again, filing your tax return on time, it’s in kind of that reasonable profit margin area, and you’re not using any kind of wacky expenses, you know, a substantial amount of expenses that are uncommon in the industry. 

Megan Porta  21:26

Okay, that makes sense. So that gives us kind of an idea of what not to do, things to kind of tidy up and keep good books, right? I mean, I’m sure that’s part of it, too. Just good bookkeeping.

Ansley Beutler  21:38

Yep, yeah, yeah, absolutely, yeah, the bookkeeping piece almost comes like afterwards. So obviously the bookkeeping is you just even preparing the return. You’re not even going to know what your expenses are until you do your bookkeeping. So that is going to be key, is to actually do it. But it’s going to make the process a whole lot easier. Again, if you’re ever asked about something, to just pull up your books. The IRS loves that someone is organized and at least knows that they’re trying to keep track of everything. What they don’t like is a shoe box full of receipts, or someone that doesn’t have any of the receipts. Again, you’re not showing them that you’re a viable business. It may be showing them that you’re more of a hobby, because you’re not keeping track of all of that stuff.

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Megan Porta  23:04

Well, as I mentioned, I was audited. Oh my goodness, I think it was this year. This year has been long. It’s been a long but I can talk a little bit about that, and then I would love to get your thoughts on a few things. Ansley, if that’s okay.

Ansley Beutler  23:18

Yeah. 

Megan Porta  23:19

So let’s see, I was notified maybe in February of this year that it was coming. I got a letter in the mail. I was like, Oh my gosh, you’ve got to be kidding me. I can hand it to my husband. I was like, Is this right? Am I reading this right? I couldn’t believe it. And we just, we had no idea why. We’re like, Why? Why my business? It’s been around for a long time. It’s a well established business, but of course, you know, you have to go along with it. So we did, and they’re really good about communication, like, we’ll be contacting you this time and all of that. And they so one auditor came to our house and kind of told us what to prepare beforehand, like, get your books. I want to see he had very specific things he asked for. I don’t think it was groceries, but expenses more for my Eat Blog Talk side of my business. So he wanted to see what we were spending on retreats, what we were spending on food for retreats, just some really specific asks. So we prepared all of that, and he came over to our house. It was absolutely terrifying. If I’m being honest, we were both so nervous leading up to it. I was just a wreck. Oh my goodness, Ansley. It was like sweating, dry mouth. I mean, the whole thing. I was just like, I can’t believe this is happening. But yeah, he came in. He was just very straightforward. Sat down with us. He had a huge stack of papers, and I could see that there were very specific questions pointed directly toward me and my business. So it wasn’t a generic thing. It wasn’t like, tell me about your business. I mean, it. Like, tell me about the retreat that happened on this date, tell me the purpose of the… I mean, it was, like, very specific. So we went through all of that. It took, I think it was two to three hours total. He looked at my books. He looked at a lot of receipts. And digital, I don’t have paper receipts, just to clarify that, yeah, I’m not a person to, like, go to the grocery store and keep my receipt and take a picture like, I just log everything through my credit card or my bank account. And that was fine for them. He didn’t need anything else. So he looked at a lot of, you know, bank account stuff. When we were done, he felt like he didn’t have everything, so he gave us a another list. He’s like, I actually need breakdowns of this, this and this. So he gave us a deadline. I think it was like seven to 10 days after he was there. So we spent, I don’t know, probably two full work days pulling more stuff together for him, and then we had to upload them to the IRS drive. And it was just stuff like credit card receipts for mileage, or, I don’t know, it was just like very, very specific stuff. And then after that, we were good. He was satisfied with whatever we sent him. But it felt like, when I look back, it really wasn’t a huge investment of time, but it felt like it was longer because it was so stressful and we were just we were worried that, like, oh my gosh, are we gonna be… Did we do something wrong? Because we literally did nothing wrong. Are we gonna be put in jail? Like it was just so terrifying. So to be done with it, we were just kind of like that anxious let down where you don’t really know what to do with yourself, like, oh my gosh, Is it really over? We’re done. So that’s kind of it in a nutshell. 

Megan Porta  26:52

And I do have an idea about why my business was flagged, and I would love to get your thoughts on this Ansley, so my CPA, and I don’t mean to throw him under the bus, because he he doesn’t know now, he knows my business really well, but be sure that you know, I think he was one of those CPAs who maybe didn’t know creators businesses very well, and he was just learning along with us. But I had hosted a handful of retreats in the year that was audited, and the expenses for retreats are pretty massive. So we do, you know, like a rental car, we do a property tons of food. We do catering, gifts, travel. I mean, there’s so much that goes into it. So what he did was he lumped that into a category called travel, and I don’t think that was appropriate, because that was one of the things that he asked so many questions about. He was like, why is this travel? And so we really had to explain what went into a retreat, what was the purpose? Why were people paying me to come to a retreat, like on and on and on. So we just really had to prove that this was a business venture, that we were providing education, and we were getting together to collaborate and learn. And yeah, he they just really needed proof of that. So I think the travel category threw it off. What do you think? What do you think about that? 

Ansley Beutler  28:13

Yeah, so I’m honestly you mentioned a few categories that are kind of those that are pretty hot, hot topics to go for the IRS to go dig into so with travel and then meals as well, those are common things that obviously people can take advantage of. You know, they’re gonna go on a yacht and go sail around the country and go call it a business expense, or eat extravagant meals, call it a business expense. And those are probably two of the biggest buckets, which for you are valid because you’re hosting basically an event. But I would be curious what the code was that was input on there, because if it, I’m assuming is your Eat Blog Talk, is it combined with your food blog, or do you have two separate ones? 

Megan Porta  28:59

No, it’s under one LLC.

Ansley Beutler  29:01

One, yeah, and so that’s where the NAICS code can it’s probably, that’s probably what it was, because they may have input a blogger code, and then they’re seeing a bunch of travel and a bunch of meals that are going to be outside of what most people in that industry would would typically input. So I’d be curious to see what what code they did input. But if that’s what they honed in on, I’m assuming that that’s what flipped off like, hey, this expense is three times. This expense of travel is three times what everyone else in this industry, on average, has been reporting. We got to go dig into it and ask her about it. Is what I’m assuming happened. But yeah, yeah, that’s, I mean, they can definitely be, it’s normal to be, you know, nervous about it and anxious about it. It sounds like you got a, what will be called, like a field audit, which means that they come to your house. 

Ansley Beutler  29:41

They don’t always come to your house? 

Ansley Beutler  29:57

No, no, there’s, like, there’s three. Yes, there’s, I mean, honestly, I would probably prefer that, because that he probably could see you and see that you have, you know, books, and that you have everything prepared and all that sort of stuff. There’s, from what we learned in accounting school, there’s three different types of audits. One is a correspondence audit, which is when it’s only done over mail that could take forever. That’s where I’m, like, I just talked about anxiety could be going on, like, a year, and they’re asking for you to send, you know, send receipts in, or seeing send PNL’s in. We all know the IRS loves to communicate via postal service, and which can take so long and it can just string out the whole audit, yeah, but that’s one type. Another type is a field audit, where they come to your house, and then the third type is when they actually call you into the field office, like your local field office, and you might be questions there, but yeah, no, IRS agents are also they’re federal law enforcement, like they they look like, can sometimes look like police officers if they’re going over to your house. I mean, you kind of feel like you’re being, you know, like, I don’t know, just like you feel very vulnerable because you’re exposing your business and everything to this person who’s trying to find, you know, maybe something wrong with it in his sense, it sounds like he wanted more clarity over that specific topic. I mean, I’m hoping that he got his clarity. It sounds like he did after the second time, and was like, able to say, Yep, this is valid. This is just a little twist in her business that it’s not a standard, you know, individual writer type of business with the the travel and stuff like that. But yeah, the buckets of expense, expenses again, really look at that with your with h and r block or Turbo tech or something like that, because that’s, that’s where their analysis stems from. Are all those different expense buckets, and you want to make sure that they’re being categorized in the right field. They have, like, a miscellaneous bucket too for miscellaneous expenses. And that’s probably a pretty big red flag, too, if you go stuff, a bunch of stuff in a miscellaneous expense bucket, you know, and again, you have $30,000 in there and 40,000 in revenue. They’re going to be like, wait a minute, we have no idea what this is. Then you make it a correspondence audit and say, we need a breakdown of what the miscellaneous expenses are. But, yeah, yeah, that’s one of my thoughts. 

Megan Porta  32:21

All right. Well, that makes more sense, and I could tell, like you said, once he saw us and laid eyes on us, I think it was pretty obvious that we weren’t being sneaky. We weren’t doing anything wrong. And I could tell that I knew that he knew that right away, just by seeing us in our environment and seeing our home and like we are normal people. We don’t live extravagantly. We’re not we don’t have like, five BMWs parked in our driveway or anything like that. So I think it was really valuable to have him come because he did give us the choice. Do you want to come into the office, or would you like me to come to our to your home? Gotcha and my husband, I immediately were like, Let’s have him come here, just so he sees what? Yeah, how we live like we’re really low key. So I think that helped. He kept telling us how he was just really grateful that we were honest and thank you for being so cooperative. He said this all a lot. He was like, Thank you. You guys are great. We’re really great to work with. We’re like, Oh, I wonder if there’s people who are just complete jerks to him there. There must be, right?

Ansley Beutler  33:24

Yeah, I’m sure. I’m sure there are people who don’t respond, or, like, give them a hard time, or like, again, string, string them along, and like, it’s just a goat rodeo that, I mean, again, cooperating with them is, oh yeah. Like, gonna show that you have nothing to hide. And again, just having some sort of bookkeeping system, they they love to see that you have something in place, even if it’s a spreadsheet, yeah, doesn’t have to be QuickBooks or Freshbooks or whatever. They just want to see that you’re actually doing something to go calculate these numbers that you put in that were reported on the tax return, and they weren’t just like, pulled out of thin air. That that goes a long way. And then if you have receipts, even if they are digital, and you’re able to pull some things up again, that’s going to prove to them more that, hey, they’re like, they’re trying to do this the right way. It’s different. If it’s like a fraud type of audit, if they think that you’re committing fraud or something like that, it’s going to be a completely total, total different thing. For the most part, most audits are going to be, hey, there’s like, this discrepancy here, and we want to learn more about your business, or make sure that something wasn’t hidden wrong, so that we kind of know what’s going on here. And that sounds like the type of audit you got.

Megan Porta  34:30

And then there were categories other than retreats, that he just wanted breakdowns of very, very thorough breakdowns. So that’s what we spent a lot of our time doing. Was going through my business, credit card and my bank account, and just literally line by line. It was very tedious, but I would just have to go through and log every single expense that fell under said category. And then that was that happened multiple times for multiple categories. So it was like extremely. These work, because we had to do it for the entire year for both accounts and like keeping that in mind. So the better books you can keep, the better off you’re going to be. I just keep a spreadsheet, but I’m very I thought I was doing a good job, but once I went through this process, I realized that I’m not as organized in my spreadsheet as I thought I was. So it’s really changed the way I organize my like, my budget and my expenses and what I log. Because once I started going through it, I realized, from an outside perspective, this might not be so clear in my mind. It makes sense, but I can see where he would need clarification. So yeah, it took, oh my gosh, a long just, yeah, it was like painstaking to go through all those, yeah, but it’s what he wanted, and he was happy. So we were happy, yes,

Ansley Beutler  35:49

Oh, man, I’m sorry you had to go through that. But yeah, the the audit, that’s what I was doing in public accounting. I was an auditor, okay, for a Fortune 500 company. And I mean, my like area that I was focusing on was, I kid you not, like one line item on the PNL, it was one line that was my entire job was to audit that that was basically functioning like this IRS agent before a business and basically working with their accounting department asking for receipts and basically recalculating what what they claim is in this expense bucket. So if the word audit can be very detailed, and they want to understand all the mechanics behind it, and that’s that is where bookkeeping can I know it sounds so boring, the bookkeeping piece and so elementary, but it is like it is the backbone of a business. I think one you need to have decent books so that you can see what’s going on. Megan, that you don’t want to just go say, oh, here were all of my credit card expenses. They amounted to $20,000 what did you spend money on? Was, was $10,000 of it, like marketing, and you want to make sure that you can see, maybe the ROI, that the revenue may be spiked after you did that, or something like that. So you want to be able to break it out into different categories for your own like analysis, that you can make good business decisions, but also to do accurate reporting to the IRS, so that it’s not it’s not all lumped in different categories, and especially if you have an accountant that maybe doesn’t fully understand the business, or maybe you’re taking your books to an H&R block, but having someone else do it, many of those tax accountants, they they’ll take your numbers and they’ll just input them as they are into their tax software. And so if you have whatever, $20,000 in advertising, and that’s just what you called it, even though it may be, you know, a Pinterest marketing course that you took, or, you know, something else that maybe could, could possibly even feel like advertising, they’re going to go put it in that bucket, and they may not ask you about it. So you really want to make sure that you keep detailed books if you’re having someone else do the tax return, so that they know, hey, this is a lot in, you know, this specific category, like, Are you sure I do that for for my bloggers, all, I’ll ask them about travel expenses, and then mileage as well. Mileage, I guess, can also be another area that can be heavily looked at. And I’ll ask my my clients that they have 10,000 miles that they’re reporting. I’m like, is there an extra zero here? Where’s the mileage? Do you have backup? I’m big on documentation. I want to make sure that, like, it’s actually we actually asked someone about it, just so that we didn’t glance over it and make sure that it’s actually valid. And a lot of times maybe it’s not, and maybe it wasn’t a business expense, it wasn’t a business trip, and then maybe sometimes it is. And now we have it actually documented. So for us, about it in three years, we we can kind of pull that up. So, yeah, bookkeeping is huge. 

Megan Porta  38:46

Yeah, that makes sense. And then, just so everyone knows. I mean, I kind of alluded to the outcome. We weren’t thrown in jail, we we weren’t in trouble. We did cooperate with everything timelines, and then we were over communicative too. So if the auditor was like, I need your documents uploaded to the site by Tuesday, and we didn’t have them uploaded Monday, we would communicate with him and just be like, we are going to get to it tonight. You’ll start, you know, just like, super overly communicative. And I think he really appreciated that. And in the end, we ended up owing just a couple of $100 we were not off by far, and I actually found some expenses that I hadn’t logged. So I thought it might come out in our favor. I was like, Oh, that would be so great if it actually came out in favor. But it in the end, it was just like, oh my gosh, just a couple of $100 really, for all of that, yeah, but it was, I mean, I’ll take that over. I don’t know, so many other outcomes. We were just, we were really pleased about that, so it was all good in the end. Just be responsive. Be willing to share. You know, assuming you’re not doing any. Think shady just communicate well, and I think that will get you far. 

Ansley Beutler  40:06

Yeah, exactly yes. No, I, I think you’re spot on. Yes. Just like, mean, it’s kind of plain and simple, if you happen to be in a situation like that, definitely cooperate and show them, you know, the information that they’re asking for, and trying to be up front with them on like, Hey, I have, you know again, they’re there. They know that most people, especially business owners, who are being audited, they’re they’re not all accountants. And they’re like, I didn’t you probably didn’t even know that you had this in the travel bucket, and maybe it should have been in some first out in some of the other buckets. And they can be very understanding with that. So they’re not like, cruel people trying to catch everybody doing something wrong at the end of the day, a lot of them just want to understand the numbers and make sure that there wasn’t some sort of error, and probably to make sure that, again, that statistics analysis that I keep talking about is huge, and they might want to make tweaks to that if they keep seeing this particular type of industry reporting certain types of expenses or different profit margins or something like that. So they may also be asking to kind of for their own interests, to see what actually is going on here, so that they can go make their own changes.

Megan Porta  41:12

Oh, I didn’t think of that, yeah, just making tweaks on the back end. Yeah, yeah, that makes sense. And then also just want to touch on the emotional aspect of it, because it literally set a tone for my ear that was not ideal. And during it, you know how when you’re in times of stress, you don’t really know how stressed you are until after, and then you’re like, holy crap. That was, yeah, that took a lot of energy out of my soul. That’s exactly what happened. We thought we were fine, and then shortly after that Flavor Media happened. So it was like this double whammy year that just spiraled out of control. So I would say, if you do get chosen for an audit, just do what you can to manage your energy. If you have energy issues, like I can, I don’t know, just take care of yourself, because it really can hit you hard unexpectedly, because it it’s scary having the a person come into your house, you feel like, might, I don’t know, accuse you of doing something like you were saying earlier. It feels like a police officer is in my home accusing me of doing something wrong that can take an emotional toll, so just be prepared for that and just take care of yourself, is all I would say about that part of it. 

Ansley Beutler  42:28

Yes, no, definitely. I completely agree. It’s it’s not the end of the world if you do get one of those, those letters, but making sure that you just have everything buttoned up. It’s great that you had your husband there to like support you, and that, like, knows also about your business, and maybe is able to kind of back you up on some things. And maybe, like, when you’re feeling overwhelmed, if you like, the officer is sitting there, he may have been able to, like, speak up and be like, No, this is how her retreats work. Yes. And now you have two people again, saying the same story to this officer about how your retreats work, and why there’s this much in meals and all of that is just going to be like, like, more confirmation for officer. I’m glad that he was pleasant with you too, and appreciated your just kind of quickness and getting everything to him.

Megan Porta  43:12

It was, it was a pleasant experience, considering what happened. He was a night. He was a super nice guy, so that helped. Good. Yeah. So anything else we’re missing? Ansley, I feel like we covered a lot just about why we might get audited, what to expect, you know, kind of the outcome afterward, you’re not going to get put in jail, most likely, right?

Ansley Beutler  43:33

Yes, yeah, yeah. I mean, yeah, that’s a common thing whenever, you know, someone gets even just a letter of someone at the IRS, just even asking them to elaborate on, hey, give us a breakdown of your of your income type of thing. It’s, I feel like, there’s, there’s that kind of emotional just like, response of like, oh my gosh, I’m in trouble. I’m gonna get I’m gonna get fined. This is gonna be awful. So if you do get some sort of letter, I mean, I have, like, whatever the system is, where, like, you get, you get photos of the pieces of mail that are coming, that are coming to your house, like the day or two beforehand. And I can feel my heart racing whenever I see something from the Internal Revenue Service. But I’m like, Oh my gosh, what is it going to be? I mean, it’s a very common response and whatnot, but like, again, at the end of the day, unless you were committing some sort of fraud, or actually, you know, doing something, and you know that it’s wrong, you should just kind of take a little bit of a breather and say they’re they really just want to know what this number is, or they want to have more information on this category, or something like that. I mean, yes, sometimes it may, may turn out where you owe a little bit more. Hopefully it’s not even more than that, but at the end of the day, they’re trying to just kind of, you can audit the numbers to make sure that business owners are not taking advantage of the system and all of that. So it’s definitely not something to be too scared of with jail time and all of that, unless you’re doing something you know wrong. But I’m sure that 100% of people that are listening to this are not, are not doing that, and so it’s just taking a little bit of a breather and responding on time, and then asking them questions if you don’t know, and you’re like, you guys asked for receipts. How many do you? How many do you need? Or have them all on Amazon or something like that, just so that you’re willing to participate in whatever they’re asking is going to be huge.

Megan Porta  43:41

so valuable. I loved this chat. Thank you so much, Ansley for doing this with me. I couldn’t have done this without you and just having your perspective on it. So thank you so much.

Ansley Beutler  45:25

Absolutely. Yes, I’m glad I thought it all worked out. Hopefully this next tax season goes smoother for you. 

Megan Porta  45:36

Oh gosh, 2025, is going to be a breeze. I already feel it. Yeah, do you have words of inspiration to leave us with? Or maybe a favorite quote? 

Ansley Beutler  45:45

I will leave you with a little bit of inspiration for entrepreneurs, because it is I find myself telling me that, telling myself this, just in this season, it’s right now we’re recording this. We’re like, on Thanksgiving week. It’s about to be Thanksgiving. I feel like I’ve come off the past two weeks of life, hustling to get Thanksgiving recipes up and get everything squared away with end of year tax things and all of that. And I just think as, like an entrepreneur, like a business owner, to just really at this time of year, dig deep into why you’re doing it, and like, focus on that this time of year and lead with that is my, my, my piece of advice for a lot of people this time of year, just because I feel like it’s chaotic, and then I guess it goes hand in hand with, like, the IRS audits. I know that was probably a horrible experience for you, but you’re still hosting a retreat, and you’re still blogging, and it didn’t turn you around, so just kind of keeping in the forefront of your mind, like, why you’re doing it, I think is, is so powerful when you’re feeling overwhelmed or something happens, like this audit, and you just feel like your life is crumbling, to just really, really dig deep into why, why you’re doing it. 

Megan Porta  46:54

I love that. Yeah. I mean, for sure, I could have used that as an excuse to shut down my retreats, right? I mean, then I’m done, yeah, but I just, I so believe in them and love them, and they add so much value. So I wouldn’t, I just wouldn’t do that. So I love how you ended on that. That’s perfect. We’re gonna put together a show notes page for you. Ansley, if you want to look at those head to eatblogtalk.com/peachperfect. Can you tell everyone where to find you, and also, if they are interested in your CPA services, how to go about doing that?

Ansley Beutler  47:29

Yes. So you can find me at peachperfectfinancials.com and there’s like a little inquiry page where you can fill out a little form to get in touch with us. And I do inquiry calls with all of our new clients if you just kind of want to get to know how we own know how we operate. There’s also a services page where you can kind of see the services that we offer, but that’s the best place to find me is going to be through that inquiry page. But then I do also have an Instagram account that I typically post a little bit more often on during tax season, just kind of with helpful tips and maybe some reminders and stuff like that.

Megan Porta  48:00

Awesome. I hope everyone goes to check Ansley’s services out and all of her site and socials. So thanks again, Ansley for being here. Thank you so much for listening food bloggers. I will see you next time. 

Outro  48:14

Thank you so much for listening to this episode of Eat Blog Talk. Don’t forget to rate and review Eat Blog Talk on your favorite podcast player. Thank you and I will see you next time you.