How do you feel about cash sales? If you were a self-proprietor, would you find it easy to “cheat” just a little (or a lot) and not report the cash collected from your customers?
I have strong personal feelings about doing that sort of thing. Not only is it not ethical, but there is no such thing as cheating just a little bit. It’s like saying, “I’m a little bit pregnant.” You’re pregnant, period. You’re cheating, period.
I had a conversation with a person the other day who asked me if we claim cash that Mr. A is paid. I told them that we are a legitimate business and all money earned goes into the bank and is claimed on our income taxes. I told the person not only was it unethical and unprofessional to not claim income, but I’d rather sleep soundly at night without having to worry about being audited. The person asked me if I didn’t think the IRS had “bigger fish” to fry.
Well, guess what? Apparently the IRS randomly chooses people to audit, it doesn’t have anything to do with how big a fish you are.