3 Tips for Facing a Small Business Tax Audit
There is nothing worse than receiving that dreaded letter in the mail. You know which one. The one from the IRS explaining they need more information from you.
Nobody wants to receive this letter, but many small business owners find themselves in this position every year. If you ever find yourself in this unenviable spot, here are three tips for coming out on top:
1. Don’t panic. An IRS tax audit is no reason for panic attack. Furthermore, you don’t want this to put a dent in your productivity.
If the IRS sends you a notice, read it carefully to determine what they are looking for. In most cases, your response requires nothing more than additional documentation. For example, you may need to forward missing 1099’s to take care of what appeared to be a math error.
2. Contact your tax professional. Unless you are 100 percent confident in your ability to respond to the IRS, reach out to your tax professional for assistance. This person can read the letter, devise a response, and help you put this in the past once and for all. The last thing you want is to make another mistake.
3. Make changes now to avoid the same problem in the future. If the audit was the result of a personal mistake, it is your responsibility to ensure that this does not happen again. Changing your approach today could help you avoid the same situation down the road.
Do you have additional questions regarding IRS audits? If so, the IRS website is full of information and guidance. It is here that you can learn more about:
- Audit selection
- Audit methods
- Audio notification
- Your rights
- Audit length
- Records needed
- Audit determinations
If you are lucky, you will never face a small business tax audit. Conversely, if you find yourself in this position you can use the tips above to your advantage.