The number of auditors in the IRS could be doubling in the near future and may result in an increased focus on tax filings for small businesses. Below please find our recommendations for preparation and readiness should your business be audited.
Record-keeping
The key focus of an IRS audit is to substantiate your tax returns, and the more organized your record-keeping the more straightforward any records requests and reviews will be to resolve. The last thing you want to do is make the IRS have to guess on any figures. Keep records of expenditures, income, and deductions filed in a detailed manner, ideally within an online bookkeeping system, and reviewed by an accounting team.
Know when to retain help
There’s no shame in admitting you need help. If you are worried about the possibility of your small business being audited and you don’t think you can get through it on your own then get some accounting and tax support. Whether you hire a new staff member or get an outsourced solution like Stage 1 Financial it can make all the difference to have talented, experienced help in your corner. While an audit may be an infrequent occurrence for your business, our experts work with them and the IRS on an ongoing basis and are familiar with the rules, processes, and procedures involved.
If you feel like your business isn’t in the right shape to weather an IRS audit right now then now is the time to correct that. Better now than when you’re actually being audited. It’s also good to keep in mind that the IRS isn’t the only reason you will be going through an accounting review. If you are planning on raising capital at some point then confidence in your current and historical financials during diligence greatly impacts speed and the probability of success.