As a business owner, it’s important to take steps to make sure that you’re prepared for an audit. While it’s something that many companies don’t think about, preparing for an audit ahead of time can save you a lot of time and money. In fact, it could even save your business. Here are a few of the most important things to know about preparing for an audit as a business owner:

1. It’s important to document all of your income

In order to make sure that you’re prepared for an audit, it’s important to document all sources of income along with your business expenses. Make sure that you don’t fail to document even those small sources of income, which can add up to a substantial amount of money over time.

2. Keep old documents in case you need them

If you’re audited, it’s possible that you’ll need documents from the past to show the IRS. In most cases, it is best to keep your records for several years. Some business owners will need to keep their records for seven years, but others may only need to hold on to old records of income and expenses for three years. It’s best to talk with a professional CPA to know what will be best for your business.

3. Understand what being audited entails

It’s important to have a basic understanding of what being audited would entail for your company, as the impact of being audited varies greatly from one business owner to another. A skilled CPA can give you a better understanding of what you can expect. This can help to keep you from being caught off guard, which will help to ensure that the process goes as smoothly as possible for you.

4. Be calm and professional in your demeanor when you’re talking to the auditor

It’s important to be aware of your overall manner when you’re talking to the auditor. It’s important to be calm, professional, and confident. Try not to appear nervous as if you have something to hide, but realize that the auditor isn’t your friend either. Their goal is to find discrepancies in your reporting and catch you out there. So, it’s important to have your records prepared and avoid contradicting yourself on anything.

For more advice or for help with tax preparation, speak to us at Abbo Tax today.