What Happens In An Audit?

Audit.

Every business owner and freelancer lives in fear of that word, even if they’re not really sure why. If you don’t utilize professional bookkeeping services, you may not have any idea what really happens during an audit, or why it’s something that’s so feared in the entrepreneurial community.

In this post, the online bookkeeping experts at RQB have outlined a few facts (straight from the IRS!) about what actually happens during an audit and how outsourcing your bookkeeping services can help you avoid finding yourself in the middle of one.

Types Of Audits

One thing that surprises many of our clients who’ve never used bookkeeping services is that there’s more than one kind of audit.

1. The Mail Audit – As the name implies this audit is carried out through the mail. Typically, this type of audit is triggered when the IRS simply needs more information or supporting documentation for your tax return. Using online bookkeeping services comes in very handy during this type of an audit, as all of your documentation is in one easy-to-access place!
2. The Interview/Examination Audit – In this type of an audit, the taxpayer is asked to visit an IRS office in person so that receipts and documentation can be examined immediately.
3. The Field Audit – This is where audits get their reputation for being unpleasant. During a field audit, an IRS representative will actually visit your home or business to examine your records. If you haven’t been using bookkeeping services, it could get dicey!
4. The Correspondence Audit – Sometimes carried out via electronic means, the correspondence audit is very similar to the mail audit. It’s triggered when the IRS needs supporting evidence about very specific claims made on your tax report. It can also be a way to collect unpaid taxes.

Your Rights During An Audit

From the sounds of things, being involved in an audit means the IRS asks a lot of questions and pokes around in your financial records. Many business owners wonder what their rights are when it comes to meeting demands for supporting documentation.

Your legal rights, according to the IRS, are:

• A right to professional and courteous treatment by IRS employees.
• A right to privacy and confidentiality about tax matters.
• A right to know why the IRS is asking for information, how the IRS will use it and what will happen if the requested information is not provided.
• A right to representation, by oneself or an authorized representative.
• A right to appeal disagreements, both within the IRS and before the courts.

Online Bookkeeping Services Can Help You Avoid An Audit!

Contact RQB to enroll in online bookkeeping services so that if and when an audit is required of your business, you won’t have to lose any sleep over it.