Preparing for an Audit
Preparing for an audit can be a stressful activity, but even more so if you don't have some instructions to follow. When you have the education of a professional, it can reduce some of the chaos that goes along with this process. It also helps you understand what they are looking for and how you can gather the proper documentation and numbers quickly. Obviously, it's going to be better if you have all of this together from the beginning and can avoid spending a lot of unnecessary time working on the project.
Keeping Organized Files
This will also help you be clear that everything is already in one place and you know for a fact that you don't have any extra receipts in a drawer in your office or hiding behind your desk. This is the proof they will be looking for to make sure that you have all the deductions you claimed and that they applied to your business or household in just the way you said. Keep in mind they are not there to cause you problems, but they will identify any potential issues right away. Even though it feels very invasive, this can actually be a time when you have a clean start and know there is nothing left that can cause you to be unable to pay taxes in the future.
For those who don't have everything in one place and need to get all their paperwork together, you just need to do an entire sweep of your house and office. Then, you won't have to wonder if you missed anything or if you should have checked somewhere else. Those documents that you don't have on hand can be gathered from your service providers. Contact them to see if you can download copies of monthly statement, purchase receipts or anything else that will prove exactly where a certain amount of money went.
Getting Cash Transaction Receipts
If you have purchases that you made with cash, then contact the person who you bought something from, and have them write a receipt for you. One example where this can be an issue is where you may have purchased a car from a private individual. Beyond the bill of sale, there may not be enough proof to show how this occurred. This is why you'll want to keep all these papers in one place, preferably a copy in the vehicle and one in your house or somewhere safe, such as a safe deposit box.
The Internet is also going to be a wealth of information for you, including free slideshows that you can use for education on how you should prepare. These will lead you step-by-step through the process so you don't miss anything important. The fact that you don't have to pay to access these just makes them more attractive to customers of all levels. For example, if someone has just started their own business a couple years ago, they may not be familiar with how this procedure will go forward. In these cases, these slideshows and other documentation that can be downloaded will be a lifesaver for them to use.
Keep in mind that when you're preparing for an audit, you are basically getting ready for an interview that can go a lot of directions. If you feel the need to have tax counsel there with you, then they can help advise you along the way. However, in order to get through it, you will need to be open and honest with everything and make sure that they get all the data they need.
Tips Cutting Your Tax BillGetting tips for cutting your tax bill before you file a tax payment extension can be...
Tax Tips Individual InvestorsLearning about tax tips for individual investors is an effort that will make sure you...
Correcting Inaccurate Tax ReturnCorrecting an inaccurate tax return is important so you don't end up getting flagged for...
Changing Jobs For Higher SalaryIf you're considering changing jobs to avoid small business tax payments or make a higher...
Deciding To Quit Your JobMaking the decision to quit your job is one you need to do carefully because there should...
Small Business Tax ObligationsIf you are starting a small business you should know that there are many expenses and...
State Guides to Credit Card Laws
- North Carolina
- West Virginia