How to Survive an IRS Audit of your Business
1. Limit the Scope
On the Exam Letter that you receive from the IRS, there will be a year in the top right corner. This is intended to limit the scope of the audit. Typically the examiner will want to include a year in advance and the previous year, but you do have the option to decline this. By limiting the scope of the audit, you can potentially limit the damage done to your business.
2. Know your Numbers
It is very important to have a solid organizational and bookkeeping process in place. Know your numbers, know your monthly numbers, have proof for your expenses, save your receipts, etc. Quickbooks can be a great resource for this, allowing you to easily provide overall figures to the examiner.
3. Timeliness – Be Responsive
It is critical to be on time and know the deadlines in this process. If you begin to miss deadlines, the IRS will often start proposing balances based on the figures that they do have. After enough time passes, these proposed balances can be reflected as actual balances, and then you may be in serious trouble.
This can be a very overwhelming process for business owners. If you find yourself worrying about how you might handle this sort of thing or are already deep into the process, please give us a call at (888) 573 – 5775 and let us help guide you with our expertise!