In a previous blog post we discussed some of the different types of audits, and how they might affect your personal and business life. We also talked about the fact that online bookkeeping services such as those we provide at RQB can help you to not only avoid an audit, but also to be adequately prepared if an audit is required.
In this post, we’ll take a look at some more specifics surrounding the audit process: the reasons that the IRS might inform you that they plan to execute one of the four types of audits for your business.
According to the IRS, there are three reasons you might be selected for an audit:
- Your Business Was Randomly Selected – Sometimes returns are selected based solely on a statistical formula that the IRS uses to spot check the millions of tax forms that are filed each year.
- Your Document Records Don’t Match – The IRS may select you for an audit if the payor records, such as Forms W-2 or Form 1099, don’t match the information that you reported when filing your business taxes.
- There Are Issues With Related Explanations – “Returns may be selected for audit when they involve issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit,” states the IRS.
Although audits have a reputation for striking fear into the heart of small and medium-sized business owners, you can see from this list that being summoned for an audit doesn’t always mean you’ve done something wrong. Still, it’s always nice to know that you can prove your innocence with the documentation that’s carefully tracked by our online bookkeeping services.
Online Bookkeeping Services Lower Your Risk Of An Audit
Mistakes can happen, even when you have professional bookkeeping services. Perhaps you simply forgot one of many 1099s, or put a decimal in the wrong place when reporting money earned. However, it’s much easier to provide supporting documentation that proves it was only an innocent mistake (and not an attempt to defraud the government) when you use a professional bookkeeper.
Our online bookkeeping services keep track of all your income, expenses, and documentation tracking so that it’s all in one, convenient, easily-accessible place if and when the IRS comes a’ knocking.
So what are you waiting for? Sign up for our online bookkeeping services for small businesses, and get the peace of mind that only comes from knowing that your financials are being taken care of properly.