No one enjoys having their business audited by the IRS, but being prepared with accurate record keeping and maintaining documentation will certainly help. In addition, hiring a professional bookkeeper for your business will alleviate many sleepless nights and help your business avoid pitfalls that can occur during an audit. “We do what we do for clients because it makes them audit-ready”, said Liz Silva, founder of Hamilton Bookkeeping, who has over 30 years of bookkeeping experience and is a Certified QuickBooks® Pro Advisor, and a member of the American Association of Professional Bookkeepers.
So what are the key things your business will need to provide during an audit?
All records that substantiate your tax return. Be sure to have all receipts in order and clearly labeled. Neatness builds your credibility with the auditor.
- Plan to provide all Bank statements, canceled checks, and receipts. You will need your electronic records for both of your credit card and bank statements if you do not have the printed documents. Most likely the IRS will want to see both your business and personal accounts.
- Books and records for your business. This is when having your record keeping neatly done on a system like QuickBooks® is helpful, but if you don’t then be ready to provide everything you have like checkbooks, register tape, appointment books, logs and diaries and even documentation for all your equipment.
- Auto-log book or records. Any receipts to do with travel and car expenses.
- Office rental records or mortgage payment receipts.
In addition to providing all the records that substantiate your tax return, you need to be prepared to back–up any income sources or tax deductions. So, knowing the tax laws or hiring tax professionals to guide you is important when giving you offer explanations of any deductions you might take.
Remember, the IRS likes to see a paper trail or electronic trail to match your record keeping. If you are a business owner who currently uses Petty Cash instead of a business debit card to show cash purchases, you might want to change this. In addition, IRS will require paper documents. They do not communicate by email, only by fax or US Mail.
Do you have questions or would like some help either learning how to set-up and use QuickBooks® or you would like to discuss having Hamilton Bookkeeping assist your business, give us a call at 978.468.1661 or email Liz Silva directly at: Liz.s@hamiltonbookkeeping.com .
