People like to speculate about IRS "red flags." These are the things that are certain to cost you an IRS audit, or else definitely put you in their sights.

And, considering that the IRS increased the number of audits on personal returns by 65 percent last year, you probably want to pay attention to this next part. If you have a business there is one GIANT red flag you might have that you'll want to get rid of.

This all has to do with stats on audits. If you have a Sole Proprietorship (Schedule C) business, the chances are 1 in 7 that you will get an audit. Stop a second and think about that -- 1 in 7! That's based on the increased audit force continuing at the current level. Now consider they raised a lot of money last year. I think the IRS is going to get more manpower and that means that they'll have more people looking for you.

So, if you have a business, what can you do to reduce the audit risk? Form a business structure! We recommend an S Corporation or C Corporation or an LLC that elects to be taxed as an S Corp or C Corp. You'll have a 1 in 50 chance of being audited that way.

One warning here: If you form a single member LLC and do NOT elect to be taxed as an S Corp or a C Corp, you're going to the default taxation set-up. And, that means you're taxed as a Sole Proprietorship. My suggestion is to either elect to be taxed as an S or a C, or add in another partner (perhaps a spouse). With two owners, you'll become a partnership and file a partnership return with much less audit risk.

Here are two quick tips to think about when preparing your tax return:

1. Check the math. This is such a simple step; but it can really mess you up if you're not careful. When your return is reviewed, someone at the IRS inputs each field into their computer. If the numbers don't "foot" (i.e., properly total), your return gets kicked out. If that happens, hopefully all the IRS will do is correct your math. But there is also a good chance that you'll get another set of eyes on your return. And, when it comes to filing your return with the IRS, the less you're noticed, the better. That's because once you're selected for an audit, everything is open - not just the item in question.

If you're going the do-it-yourself route with an off-the-shelf program make sure you check the schedules that roll to other pages. For example, if you have a Schedule C for your Sole Proprietorship business, then the total at the bottom needs to show up on the front page of your 1040. The same is true for all the other schedules -- the total should be going somewhere. The problem with some of the canned solutions is that they are not thoroughly tested before they go to market and they have totals on schedules that don't properly roll forward. This is one more thing that you don't want the IRS catching.

2. Check Your Social Security numbers. Make sure that you have Social Security numbers on the return for yourself and all dependents you are claiming. Additionally, write the Social Security of the first taxpayer listed (yours or your spouse's) on each page of the return. That way if the pages get separated, the IRS won't lose track of whose return it is.

Finally, make sure that you consider whose Social Security number you use if you file a Schedule C (Sole Proprietorship). The Social Security number used will determine how you calculate the self-employment tax. For example, if a married couple had a Schedule C business and one of them had a regular W-2 job, it might be better to use that person's name and Social Security number as the owner of the business to reduce Social Security tax.

And if in doubt on anything? File an extension! You don't need a reason -- you just need to make sure you file the form on time. Individuals and business structures with partnership taxation have until April 15th to either file a return or an extension. S Corporations and C Corporations with a Dec 31st year-end only have until March 15th -- so that's something to move on right away if you haven't already!