What to Do If Your Business Is Audited

You’ve done your best to follow the codes, but there are rules about taxation governing small businesses that perhaps you missed, and now you are facing the dreaded IRS audit. Having your business audited can be stressful because of the unknown factors that go along with it. You can take some steps to help you prepare for this type of situation. Here are some of the techniques that you should use if the IRS decides to audit your business.

Determine Scope

It’s okay to ask about the scope of the audit. This will help you to establish the amount of paperwork that the auditor will be examining. It will also give you a chance to look over things yourself before the auditor shows up at your business. Take this time to determine if there’s a reason that you were selected for an audit. It could simply be a routine audit or there might be irregularities that were noted over previous years’ returns.

 

Compile Records

Get everything ready so that you aren’t scrambling on the day of your audit. Having detailed records will help to assure the auditor that you aren’t trying to hide anything. Good record keeping is the key when it comes to ensuring your success at passing an inspection. Establish justifications for the expenses that you wrote off on your taxes. An auditor is less likely to levy fines if you can show that you were attempting to follow the established laws.

 

Hire an Expert

If the audit isn’t going well or you’re unsure about how to proceed, hire a tax attorney to help you through the process. Attorneys that specialize in tax codes will understand the rules and will be able to fight for you if things start to escalate. Tax laws can be complicated and you may have made a simple mistake. This doesn’t mean that you should have to pay huge penalties if it can be avoided. In many instances, it may just be a simple miscommunication that you’re having with your auditor.

 

Be Polite

Don’t underestimate the value of being polite even in the face of accusation. If you maintain your composure, the auditor is less likely to dig further into your records. Keep your conversations relevant to the audit so that you don’t give them further opportunity to request more documentation. Another thing that you’ll want to do is be confident in your responses. This gives the impression that you’re competent and that you’re not hiding anything.

Receiving a letter from the IRS can be an unnerving situation. Use these tips in order to survive the process without facing any more penalties or fines.

About the author

Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan

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