How to Get Your Salt Lake City Business Ready for a Tax Audit
When you get an audit request, first contact your Salt Lake City tax preparer or tax adviser before you react. A straightforward IRS letter requesting a record may be a sign of a possible issue. It is always best to examine the petition with somebody who can help you craft a reply. Yes, this may mean extra money for a CPA or tax attorney’s services, but it might save you more issues afterward.
Get your documents in order. IRS tax auditors can inflict penalties for poorly kept records. Organize your records by date and by type (income, expenses, etc.). Ensure all relevant records are accessible. If they are not, getting busy obtaining them. Ask bank or credit card records or information from vendors. If records are not available, do not make them up!
Before your audit, make every attempt to rebuild lost or destroyed records, and record your efforts. When there was a fire in your workplace, by way of instance, document your efforts to reconstruct your organization records, and demonstrate that you did copies of records.
Know intentional vs. unintentional failures. Intentionally decreasing your business taxes by illegal means is considered tax evasion in an audit, and it is against the law. If you can demonstrate that your issue (no records for a specific year, by way of instance ) was accidental, the IRS will be more lenient. On the other hand, they are much faster to impose fines and penalties for intentional actions or omissions.
Prior to the audit, be sure to don’t have some personal expenses in your business records. You have to keep personal and business expenses separate. The best way to do this is to have different bank accounts and credit/debit cards and separation of corporate and personal travel costs.
If your Salt Lake City business is being tax audited for several years of losses, you’ll have to demonstrate that you’re working hard to make a profit. Selling and marketing costs, keeping excellent records can assist you in making your case.
Be ready to show documentation of company travel, entertainment and meals for the audit. These expenditures are top goals for the IRS, and you need to demonstrate the company’s purpose for every expense. The records have to be contemporaneous and include the date, time, amount, who had been there (if appropriate), and particular business purpose.
Larson and Company performs fair and helpful business tax audits in Salt Lake City. Visit their website to learn more.