Coming Soon
Subscription Marketplace - Buy and sell subscription products and services
0 like 0 dislike
451 views
in Articles by
There is no reason to be afraid of an audit if you have been ethical and truthful in your accounting methods.  However, it is best to be prepared for an audit to make sure that it runs smoothly.  Different types of audits require different preparation methods.

If a business is brought up for an audit by the IRS, there are several things you can do to prepare your business for audit.  First, review the tax returns that are being audited.  Make sure that you are ready to explain how you or your tax preparer came up with the figures in the return when you go into the audit.  If you don't know how your tax preparer came up with the figures, or you have any questions, you should contact your tax preparer prior to the audit for any clarification needed so that you are thoroughly prepared for the audit.

Organizing records used to prepare your tax returns yearly is a great way to maintain proper accounting before an audit.  However, if you have not organized your records as you filed year by year, now is the time to organize them for the audit.  Make sure that the person performing the audit has access to all records used to prepare the tax returns.  For the audit to go smoothly, these records should be organized in a logical fashion.  In addition to making an audit quick and painless, this organization will lend you credibility with the auditor, thus making the auditor take things in stride if a small issue does arise during the audit.

Your audit notice should tell you what documentation the auditor wants to see during the audit.  Typically, auditors may want to see bank statements, canceled income checks, receipts for expenses, and your financial records.  If you have a smaller business, you are not required to maintain a formal set of financial records such as journals and ledgers.  However, the auditor may request to see any financial records you do have, and see your bookkeeping system during the audit.  If your bookkeeping system in on a computer or otherwise electronic, make sure you take a printout of your financial records with you.  If you do keep a ledger and journal for financial records, the auditor is entitled to see them and you should bring them to the audit also.  In addition, you should bring with you any prepared financial statements so that the auditor has a clear overview of your bookkeeping.

If you don't keep a formal set of financial records and you are missing a few receipts, take your appointment books, service logs, and diaries with you to the audit as well.  The documentation in your appointment book, service log, and diary will substantiate your expense for deduction without a receipt, provided the expense can be proved to be reasonable based on the information in your personal records.  

If you have a home based business, you will also want to bring with you to your audit any usage logs of "listed property."  This is anything that you use for business and home use.  Usage logs show that you use these things for business purposes, thereby allowing you to take a partial deduction for that property during the audit if you have not already done so.

If you are in any doubt as to what information you need to prepare for your business tax audit, you should contact a certified public accountant to assist you and represent you to the audit representative.

Please log in or register to reply to this topic.

Related topics

0 like 0 dislike
0 replies 455 views
posted in Articles by SilkPredator
0 like 0 dislike
0 replies 450 views
posted in Articles by nicejone
0 like 0 dislike
0 replies 414 views
posted in Articles by Camella
0 like 0 dislike
0 replies 383 views
posted in Articles by HuggingDuck
0 like 0 dislike
0 replies 379 views
posted in Articles by Madept
0 like 0 dislike
0 replies 396 views
posted in Articles by BunBunny
0 like 0 dislike
0 replies 438 views
posted in Articles by UncleRhino
0 like 0 dislike
0 replies 585 views
posted in Articles by LovableStorm
0 like 0 dislike
0 replies 418 views
posted in Articles by MammothMoth
0 like 0 dislike
0 replies 458 views
posted in Articles by Conjursa
0 like 0 dislike
0 replies 489 views
posted in Articles by Finderpros
0 like 0 dislike
0 replies 475 views
posted in Articles by TrainedGuy
0 like 0 dislike
0 replies 387 views
posted in Articles by Oystrich
0 like 0 dislike
0 replies 441 views
posted in Articles by BouncyOracle
0 like 0 dislike
0 replies 468 views
posted in Articles by HarmlessRose
0 like 0 dislike
0 replies 486 views
posted in Articles by Knightmare
0 like 0 dislike
0 replies 590 views
posted in Articles by Wallaby
0 like 0 dislike
0 replies 588 views
posted in Articles by CharmingChamp
0 like 0 dislike
0 replies 421 views
posted in Articles by GraveGrass
0 like 0 dislike
0 replies 549 views
posted in Articles by DreamBaby
0 like 0 dislike
0 replies 648 views
posted in Articles by LoyalChief
0 like 0 dislike
0 replies 1,501 views
posted in Articles by Octopixy
0 like 0 dislike
0 replies 615 views
posted in Articles by HairyMagpie
0 like 0 dislike
0 replies 592 views
posted in Articles by ShowDolphin
0 like 0 dislike
0 replies 586 views
posted in Articles by GrizzlyFlash
0 like 0 dislike
0 replies 574 views
posted in Articles by VoyageHooper
0 like 0 dislike
0 replies 614 views
posted in Articles by BeautifulWolf
0 like 0 dislike
0 replies 601 views
posted in Articles by FrighteningTwinkles
0 like 0 dislike
0 replies 580 views
posted in Articles by Falconjurer
0 like 0 dislike
0 replies 555 views
posted in Articles by Emufasa
0 like 0 dislike
0 replies 582 views
posted in Articles by Celestiger
0 like 0 dislike
0 replies 601 views
posted in Articles by PositiveVoid
0 like 0 dislike
0 replies 551 views
posted in Articles by OpinionOwl
0 like 0 dislike
0 replies 565 views
posted in Articles by TrustyKitty
0 like 0 dislike
0 replies 595 views
posted in Articles by SleepyFledgling
0 like 0 dislike
0 replies 566 views
posted in Articles by GroundHurricane
0 like 0 dislike
0 replies 567 views
posted in Articles by SwiftHeroine
0 like 0 dislike
0 replies 562 views
posted in Articles by Sumogre
0 like 0 dislike
0 replies 578 views
posted in Articles by Mosquiche
0 like 0 dislike
0 replies 537 views
posted in Articles by Tabooccaneer
0 like 0 dislike
0 replies 553 views
posted in Articles by Sassassin
0 like 0 dislike
0 replies 533 views
posted in Articles by GamerAlpaca
0 like 0 dislike
0 replies 630 views
posted in Articles by MysteryWasp

55,458 topics

594 replies

3 comments

1,623,835 users

Connect with us:
...