The last thing any business owner wants to receive in the mail is an audit notification from the IRS. However, many companies are asked to provide additional documentation to support the information submitted on their tax returns. Although it may be nerve-wracking to think about the government taking a closer look at your financial records, proper preparation and the assistance of an experienced accountant can help make the audit process go much more smoothly. Here are a few steps to take when faced with an audit.
How to Get Ready for a Business Audit
1. Contact Your Accountant
Upon getting an audit announcement, it’s a good idea to speak with your business tax accountant before responding to the IRS. They will be able to help you form an appropriate reply and explain exactly what the IRS is requesting from you. This will ensure you’re gathering the right paperwork to send in or bring to the audit. Your accountant will also represent you and answer the auditor’s questions on your behalf.
2. Get Your Financial Documents in Order
It’s typical for the IRS to request a list of financial documents to verify the details on your tax return. You will want to get these in order right away to make sure you don’t miss any deadlines. Depending on the nature of your business, your auditor may want to review bank statements, travel and entertainment records, electronic transactions, vehicle records, and appointment logs.
3. Review Your Tax Return
Carefully review your tax return to match the figures to your financial records. Take note of any discrepancies you find, so you can anticipate the auditor’s questions. It’s best if you can show you have knowledge of the mistake and prove that it was unintentional. Being forthcoming will lessen their suspicion of fraudulent activity and expedite the audit process.
Keeping good records and working with a skilled accountant is key to avoiding IRS trouble. If you have gotten notice of a business audit, contact Tostrud & Temp, S.C. Offering more than 35 years of accounting experience, they will help you navigate the audit process by helping prepare documents, negotiating with your auditor, and settling any claims you may have with the IRS. They can also update your bookkeeping procedures to minimize the chances of a future audit. Call their La Crosse, WI, office at (608) 784-8060 to schedule an appointment, or visit them online to learn more about their services.