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I mean, I get the concept: Pay in cash and don't have a record of said employee(s). But to do that, you also can't really report the expense on your Income Statement, because you obviously can't produce a receipt for it.

So, either your business's profit margins are so high that you can afford to dramatically increase the personal wages that you claim for yourself by the amount of the cash paid to the hidden employees (therefore indirectly paying them out of your own pocket), or the portion of your total costs that these employees represent is such a small piece that it's immaterial and you tuck it in a larger C.O.G.S. line knowing that it won't be audited.....but if either were the case, then there wouldn't be any need to hire illegal labor to save money.

Or, I guess it's possible that the C.P.A. who audits your financial statements is a friend who turns a blind eye, which is always possible.