As we have noted in prior posts, small business owners must be vigilant in keeping good records not just for tax season, but throughout the year. Not only is this a practice that is vital to business success, but mistakes and inaccuracies can lead to audits.
Indeed, next year’s tax season may see fewer audits because of budget cuts, but scores of small businesses will still be subject to tax inquiries. In the event your company is selected for an audit, this post will give you some helpful information as you prepare.
Keep it professional – We all know that going through an audit is about as pleasant as getting a root canal. Nevertheless, it is important to maintain an air of professionalism. After all, an auditor is more likely to be receptive and quick in their evaluation to a person who is prepared and cordial compared to someone who is unorganized and confrontational.
Get organized – As we alluded to earlier, mistakes based on poor record keeping can lead to an audit, but once an audit is scheduled, you can avoid additional problems by getting as many helpful records to address the inquiry.
Know what you’re talking about – The basic rule about testifying in depositions applies to audits. You should never guess when answering questions. If you are unsure of what an auditor may ask, or are concerned that you may not have the right information to defend your position, hiring an experienced tax law attorney can help.
The preceding is not legal advice and is presented for informational purposes only.