How to Prepare for a Business Audit


How to Prepare for a Business Audit. Despite our best efforts, we all face the possibility of a business audit at one point or another. Smaller businesses are less likely to face a business audit than a large one, but that doesn't mean you shouldn't prepare for the possibility. Fortunately, with forethought and a lot of organization, you can prepare for a business audit well in advance, and limit the amount of stress you'll face.

Things You'll Need

  • Bank statements
  • Receipts
  • Financial records

Keep highly detailed records of all of your financial correspondence. Save all of your receipts, bank statements and ledgers. The more information you have available the easier it is to prepare for a business audit.

Organize your financial records logically and in some form of chronological order. Month by month, business by business--however it makes it easier for you to find what you need should an auditor request something.

Keep your financial records neat. Some will tell you to make them a mess to make the audit take longer but this is terrible advice. The messier it is, the more likely the auditor will work to find errors since he'll assume you've cluttered up your own books. Keep things tidy and he'll typically be more forgiving.

Contact a taxpayer advocate to represent you in the event of an audit. Taxpayer advocates know the tax code and can help you prepare for a business audit by telling you what to expect and how to combat it.

Go directly to the IRS website and learn about what you need for a particular type of audit (see Resources below). All of the forms you'd be required to fill out are there, as well as tips for preparing and organizing your files in advance of the auditor arriving.

Tips & Warnings

  • Hire an independent service to handle your tax returns. Impartial accountants can help keep the potential for an audit low, as they can tell you what elements of your return could be potential red flags for the IRS. In addition, an independent accounting service provides information about potential tax refunds and deductions you qualify for that you might not have otherwise known about.
  • A business audit can take several days to several weeks or months depending on the nature of the audit. A correspondence audit can take considerably longer than an office audit because of the transit times of mail. Field audits typically take a few days to a week, as do office audits.

Related Searches

Promoted By Zergnet


You May Also Like

Related Searches

Check It Out

4 Credit Myths That Are Absolutely False

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!