One of the most worrying things to be told as a business owner or an entrepreneur is that you are due an audit from the CA FTB. This is something that is likely to send shivers down the spine – an official financial audit is something that you should be taking very seriously, for a start.
Not only is this a challenge that is likely to leave you really chasing yourself trying to learn legal jargon and take in tax laws, but it will have a negative effect on your ability to work in peace.
If you want to avoid these problems, you could look to bring in a CPA. A good accountant can help you find out exactly what the main reasons for an audit may be. Crucially, they will show you how to go about winning, as well.
This is going to make it much easier to start making a genuine dent and a major contribution to the CA FTB audit. It’s better to be involved in the process, giving answers and information as you go, rather than just being involved in the periphery. You can have an accountant work on your behalf, but you still want to be involved.
That being said, you first have to work out what you have done to draw the attention of the CA FTB in the first place!
Forms of Audit
You will usually find that the audit you are dealing with will be one of two things;
* A Piggy-back Assessment Tax Audit. This means that when you are being audited by another entity like the IRS. The FTB then provides information to the other party, so that both local and state agencies can get the closest details possible.
* Originating State Tax Audit. This is carried out by the California Franchise Tax Board, and is usually for a situation in the state of California. The most common reasons would tend to be informant tips, residency issues and water tax elections.
In the event of this occurring, you need to have a pretty solid solution ready to be used. You will need to be able to provide the CA FTB with public information such as annual reports or an SEC Form 10-Ks. Also, you need to provide third party source information such as federal tax returns, and any information asked for from the return such as schedules or supporting details.
This can take some time to build up the library of information needed, but usually falls into this category. If you are being audited by the CA FTB it’s usually down to a tip-off or down to another government wishing to see what you have.
Either way, it’s best to have the right kind of aid by your side. Hire in the right people and you can make your life much easier. By bringing in a good and effective accountant you can quickly begin to make the necessary changes to the way that you work. Hopefully, with the right support, you can find answers at last.
