I'm probably one of the more qualified folks to discuss an audit and what they look for (no I'm not a CPA... just have a very complex tax return and annual IRS requests for clarification etc... some misguided would call these audits)
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OVERALL..
Get a Federal ID number... have all the cash/checks go to a single person... then issue checks and bandmates from this single checking account. Doesn't hurt to pay a CPA a few bucks to look over/consult if you fill out your own forms.
I've yet have the IRS object to sending a 1099 for recipients under the threshhold (yes have asked)... they would start a bull-o-meter test if a venue claimed a cash expense that a band member forgot.
BS and audits flow down hill.
The IRS can get creative on how to add up cash in and greatly reduce cash out when there are question marks.
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After going through the IRS calls/letters annually, clean books and clean records are much easier than playing tricks.
