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As a small business owner, something we never want to see is a letter from the IRS saying it’s time for an audit — not to fret. Here is what you can do to prepare.
One, let’s take some deep breaths. There’s no need to be nervous — the IRS conducts audits for a number of reasons.
Some audits are even selected randomly. *shrug*
If you’re audited, the IRS should provide a written request of the specific documents they’ll want to take a look at. Make sure to keep ALL the records used to prepare your tax return for at least three years after filing… it’s the law. You also want to understand the type of audit being conducted — a mail audit or an office or field audit. The latter requires answering more in-depth questions about your finances.
Preparation is key! Gather all the information the IRS asked for in advance and have complete responses to their questions. Be prepared for questions relating to things like your full-time job, family listed on your tax return and any other businesses you may have.
Once you’ve completed the audit, know that you can request an appeal to the IRS within 30 days if you don’t agree with the results.
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