You expected the IRS to come a-knockin’, and the notice arrived in the mail. A painstaking tax audit awaits you and your business. The worries tumble out as deadlines and conversations with IRS agents await you. This is a sensitive matter.
An IRS audit with a federal examiner would make any business owner shudder. Now you must prepare to deal with it, survive it and learn from it. It is a sure bet that you hope this is your first and last IRS audit.
Do the homework and know what to expect
The first thing to know is you must be proactive toward understanding what happens in an IRS audit. Thorough research is necessary. Your initial uneasiness may turn into confidence in knowing what to expect. Following these steps will help you and may prevent future IRS audits:
- Research the auditing process: You should not go into this cold turkey. A little homework helps understand what to expect. Consider contacting professional colleagues who underwent an audit. As a result, you may avoid the pitfalls they experienced.
- Organize your documents: Assemble bank statements, invoices and receipts that IRS auditors seek. With these documents in hand, you can substantiate every aspect of your business. Being organized also leads to a swifter audit.
- Maintain records you received or sent to the IRS: Because the government sends time-sensitive materials, it is up to you to prove what documents you sent and which ones you did not send. And make sure to save all IRS-related documents.
- Know that an auditor is not an ally: Auditors enter these scenarios assuming you broke some rules.
- Cooperate and be polite: Maintain your composure and avoid any criticism of the auditor. This works in your favor. Be forthcoming regarding your business records. Doing so likely minimizes the chances that the audit expands into every aspect of your business.
- Get contact information for IRS auditors involved: This includes the examining agent and group manager.
- Retain seasoned professionals: You allies include a trusted accountant and experienced tax attorney.
Worrying does not help. The audit awaits, so be organized and prepared when dealing with an IRS examiner.