Getting a notice from the IRS about getting audited can sink any business mentality. Although this is bad news, there are ways that you can prepare for the audit that help the process run smoothly, and when the process runs smoothly, your business will benefit from great preparation in the most likely form of fewer fines. In an audit situation, that’s about the best you can hope for.
In order to help you, or your business, avoid larger financial burdens from being poorly prepared for your IRS audit, Bell Solutions LLC has put together a 7 step guide to IRS audit prep.
The 7 Steps To Not Cry During an IRS Audit Preparation Guide
Step 1: Identify Your Audit
There are 3 main types of IRS audits: Correspondence Audits, Office Audits, and Field Audits. It’s important to understand the differences in the 3 types of audits because it’s a tell-tale sign of what kind of trouble you or your business is in.
So, Let’s take a look at each:
Correspondence Audits:
Correspondence audits tend to be the least severe of the audits. These are requests for specific documents, error corrections, or verification of aspects of your return.
Office Audits:
Office audits tend to be a bit more involved. That’s due to the request for you to visit an IRS Office. They will typically ask you to bring certain documentation and answer questions about areas of your return.
Field Audits:
Field Audits are the most intense audits. This requires an appointment with an IRS Official, and you get to be the host!
Step 2: Contact Your Tax Preparer
The next thing you want to do is contact the person who prepared your taxes. If it was you, you should contact an outsourced tax professional right away. You are going to want all the help you can get with any type of audit, and professional tax advice is the best avenue for success.
Step 3: Set Your IRS Audit Date
If it’s a correspondence audit, you should respond after discussing the letter with your tax preparer, or a professional.
If it’s the other two, you should try to set your date in a place that gives you adequate time to prepare everything you are going to need. Give yourself a big window, and then try to add even more time. Better safe than sorry when it comes to preparing for an IRS audit.
Step 4: Gather Your PaperWork
Gather all of your paperwork for the time period in question. We’re talking about everything, invoices, receipts, times, dates, expenses, assets, debts, etc. Everything will be in question, so you need to have as much material to support your taxes as you can. It’s extremely important to gather everything that is for you and your business.
Step 5: Double Check Your Expenses
Take the fine comb to everything, and leave nothing by the wayside. Make sure you have all of your documents. Have it all ready to go because nothing says more fines like, “uh, I don’t know.”
Step 6: Organize, Organize, Then Organize, Repeat
Your audit is being done by people who look at numbers for a living, so keep it as clean as possible. It makes it so much easier to work with numbers when they are neat and organized. You will get brownie points for presenting neat and organized documentation during your IRS audit.
Step 7: Personal Checklist
After you have everything ready for your IRS audit, your preparation is not quite complete. I know this will sound cheesy, but you need to get a good night’s sleep and a solid meal in the morning before you enter that meeting. This could be the longest day of your, or your business’, life, especially when it comes to field audits. Taking care of yourself is the final step in your IRS audit preparation.
Conclusion
Getting audited by the IRS can be a scary situation, but preparation can make the process easier. If you really take the time to get organized and prepare, it can be a quick and easy process.
If you need help don’t be afraid to ask for it. Tax professionals can really help you fend off the IRS in an audit situation.
Looking for a tax professional? Bell Solutions LLC will help you take on your organization, and help you prepare in your time of need.
Get organized with Bell Solutions LLC!