When it comes to generating wealth, you can either earn more or keep more. As the federal deficit has climbed to record levels, the federal government has begun to try to “ earn” more by focusing on small businesses and the taxes they are currently paying. In order to survive, entrepreneurs will have to reciprocate by being diligent about taking every credit and deduction that is legally allowable. Earning more comes naturally to entrepreneurs, given that the very nature of business is to develop a product or service in order to generate revenue. In addition, entrepreneurs understand that minimizing expenses leads to greater profits; however, most business owners find thinking of the taxes they pay on their business as a reducible expense to be less intuitive. In recent years, the number of small businesses audited by the IRS has climbed dramatically. The IRS unit responsible for smaller businesses is called the Small Business/ Self Employed ( SBSE) Division which has annual quotas broken down into monthly performance targets for businesses that are a part of their responsibilities. Small businesses with fewer assets typically take less time to audit than those with more assets. These quota pressures may well influence revenue agents and their managers when making their decisions about which business will be audited and which will not. The result is the shift in priorities described. Resources targeting small firms of under $ 5 million in assets has surged 34 percent while the amount targeting those with $ 250 million or more has fallen 33 percent. All of this makes the risk of a small firm paying penalties for misrepresenting its tax liability a serious