A tax audit can be a scary thing. Even though you might think that all of your books are on the straight and narrow as far as tax law is concerned, there’s always a few weird rules creeping around that might end up coming to bite you in the rear end.
That’s why it is of extreme importance to be prepared and have all of your ducks in a row far ahead of audit time. If you know what you have to do beforehand, a tax audit becomes a routine check up instead of an anxiety inducing event. It involves diligently taking care of any and all financial information as it relates to your business, as well as knowing everything you can about your tax responsibilities.
Here’s just a few ways to make sure you can survive an audit should one come your way:
Keep Proper Records
Instead of being stuck in a frenzy should you find out you’re being audited, you should instead always be keeping good records of all of your tax documents as well as relevant receipts & balance sheets as often as possible.
According to https://silvertaxgroup.com/how-far-back-can-the-irs-audit/, the IRS will typically go back two years. However, if the information in your two years of book keeping is suspect, they might end up digging even further. As a general rule of thumb, many businesses choose to keep five years worth of financial records to properly insulate them from any issues during an audit. Any bills, receipts, as well as other corroborating documents like spreadsheets and employee timesheets & payroll information is important to keep around. Should you be asked for these documents, you’ll be able to provide them near instantly which will further help your case.
Seek Out A Professional
If you don’t already have a good tax attorney or CPA on hand, now is the time to have one on retainer. These people have an intimate knowledge of the tax code far above what the layperson does and are a much better choice come audit time. Instead of representing yourself, allow an experienced professional to navigate the quagmire of bureaucracy for you.
Comply With Requests Quickly & Professionally
IRS auditors are people too who simply want to get their jobs done as efficiently as possible and with minimal hiccups. Don’t blow off appointments or make unprofessional remarks to the auditors assigned to your case as it is likely they’ll end up making your life harder. It isn’t out of spite, but poor behavior begs the question of if you have something to hide and just want them to go away. Be punctual at all of your meetings with IRS staff and take the proceedings seriously.
A tax audit can happen to anyone, and while the tax man is hardly anyone’s favorite person, there’s no reason to panic. So long as you’re able to prove to the government that you are compliant with all necessary tax laws they’ll be able to figure that out easily and move on to their next audit. The biggest thing is to keep good records, so if you are lacking in any documents right now, start tracking them down.
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