As a business owner, you may probably cringe at the sight of a plain brown envelope marked with the Internal Revenue Service’s address, also marked with the phrase “official government business.” If you have received this envelope, chances are that you are going to be audited by the IRS.
To the uninitiated, an audit can spell certain doom; but for those who are prepared, it is merely a part of doing business and a validation that you are following the rules. With that said, this post will provide some helpful tips as to how you can be prepared in the event Uncle Sam comes knocking.
Keep good records – While this may seem obvious, having organized records is one of the best defenses to an audit. Having these can tell your financial story better than you can, because numbers (unlike people) usually don’t lie. If you don’t have pristine records already, it may be helpful to go back through your financial year and recreate them so that you can be prepared.
Don’t volunteer information – It is advisable that you only answer questions that are asked of you. Like defendants in criminal investigations who believe they can talk themselves out of bad situations (only to make things worse) the same can occur during a tax audit.
Maintain professionalism – All the things that help you in a job interview apply here. Be polite, be on time and dress for success. These steps are more likely to get you further with an auditor than being surly, late and dressed in ripped jeans and a t-shirt.
If you have additional questions about preparing for an IRS audit, an experienced tax attorney can advise you.
The preceding is not legal advice.