You had expected to hear from the IRS. The notice came in the mail yesterday. You and your business will undergo a painstaking tax audit. With the confirmation, there is some relief, but more worries, deadlines and conversations await you.
A sensitive IRS audit with a federal examiner often makes any business leader shudder. But, now that it has arrived, you must be prepared in dealing with it, survive it and learn from it. You likely do not want to experience another one.
Understand what do expect and do your homework
It is critical to be proactive in understanding what will happen during an IRS audit. Doing some homework will help you overcome some of this initial uneasiness. Here are some steps designed to help you and possibly prevent any future audits:
- Research the audit process: This will help you understand what to expect as well as what it is like. By contacting professional colleagues who experienced an audit, you may avoid some of the pitfalls they experienced.
- Thoroughly organize your documents: It is important to assemble bank statements, invoices and receipts that IRS auditors will request. With these documents, you want to substantiate every aspect of your business. Being organized often leads to a swifter audit, too.
- Maintain all records that you received or sent to the IRS: The government often sends time-sensitive materials, and you must prove what documents you sent and which ones you did not send. Save all IRS-related documents.
- Understand that an auditor is not your pal: The auditor often goes into these scenarios assuming you did not follow the rules.
- Be polite and cooperative: It works in your favor to maintain your composure and avoid any criticism of the auditor. And be upfront about your business records. Doing this may minimize the chances that the audit expands into every nook and cranny of your business.
- Get all contact information for the IRS auditors: This would include the examining agent and group manager.
- Enlist seasoned professionals: This list includes an accountant and skilled tax attorney.
Worrying will get you nowhere. This audit will take place. That is why you must be organized and prepared when dealing with an IRS examiner and an audit.