You head to the mailbox on a typical day. You sit at the coffee table hand in hand and sift through the many envelopes in your hand. Then you see it. Envelope from the Internal Revenue Service and time paused. This panic is normal and expected. This is a letter informing you that you are being audited.
If you take the time to properly prepare for your audit, you have nothing to worry about. Take it from a small business consulting expert who has seen this many times in business. It’s best to hire an attorney who has experience with this sort of thing, but if you can’t afford one, you should prepare yourself for the process. Read on for ways that will help you get ready for the encounter that will hold you back for the rest of your life.
1. Since you don’t have an attorney, the first piece of advice is that you should notify the IRS 10 days before the first meeting that you intend to record the session. Don’t rely on your memory of the event and it will give you a record of what was said by whom. After the meeting, have the tape transcribed by a professional. During meetings you want to say as little as possible. This is to avoid accidentally giving them some information that could jeopardize your case in the future.
2. Keep accurate and extensive records of all business transactions, including all meetings and transactions no matter how small. If the newsboy delivers paper to your office and you give a tip, this should be on the record. Keep a secondary file of all documents in another location just in case. Keep all records for each year with the appropriate tax returns. The company my client purchased web hosting from recently audited. In their case, the accuracy of their paper and online records allowed them to complete the audit without damage. Some sloppy companies have had this fortune.
3. If you are not already as good a record keeper as you would like to be, then you should now start compiling your records and make sure you have receipts for everything you claim. If you cannot find the original, you should contact the vendor or individual for a replacement. Organize everything by month or quarter, summarize the information but provide documents to support your statements.
4. Research the audit process to prepare yourself for what’s to come. Never discuss this matter coldly. Talk to people who have been through the process. If you can’t find anyone locally, there are plenty of blogs of people who have endured the ordeal and lived to tell the story.
5. The IRS is nobody’s friend, especially now that you’re being audited. Be professional when you come to the office. Organize your papers neatly and in a tote bag or file box. Don’t show up for a business audit with your papers hanging in a paper bag or shoe box.
These are just a few things you can do to prepare for a big audit. If you want more information go online today and read about the audit process. You may not have an audit on the horizon but being prepared just in case is a wise start.