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5 Ways to Avoid Prepare for an Audit

5 Ways to Avoid Prepare for an Audit

Figuring out a way to avoid an audit may sound good, but the eventual outcome isn’t really in your control. Sure, there may be ways to increase your chances of not being audited, but the fact is that anyone can be audited, randomly, at any time.

Don’t avoid an audit; prepare for it. Here are five tips and recommendations to better prepare you for a potential audit:

#1: Don’t Panic: Your Issue may be Very Easy to Solve

An audit can send shivers up our bodies or make us stop in our tracks. That’s certainly understandable, but the reality is that many audits aren’t as scary as you might think.

Did you know the IRS sends more than 1 million letters each year to taxpayers who didn’t sign their returns? Other letters may require a simple response to a specific issue, such as making a payment, account changes or providing more information.

These are harmless inquiries that yield easy resolutions you can provide on your own.

#2: Keep Good Records

Whether it’s your tax returns, source documents, or checks received and cancelled, you must keep copies of all tax records. Credit card statements simply aren’t enough because you may be asked to provide more documentation.

Keep your receipts on file; Sound Business Services (SBS) can provide you powerful solutions to keep up with your receipts and reconcile them with credit card transactions and bank data. It’s a process where we tap into amazing technology and apps, and use our knowledge and experience, to help you keep good books and records up to date, while also providing actionable data and insights.

#3: Don’t Be Duped by Fake IRS Emails or Calls

The IRS will only contact you directly by mail – not by email or through a phone call. Imposters will often pose as IRS staff over the phone and demand money from you to fix a “supposedly” dire situation or need. Others will email you and include a link that can lead to identity theft or ransomware. Know that the IRS will neither send you this kind of link nor call you over the phone, demanding something urgently.

When you do reach out to the IRS over the phone, make sure you take down the agent’s ID number and name, log the time you spoke to the agent, and jot down any important points he or she covered in your conversation.

#4: Don’t Mix Business and Personal Expenses

Your business and personal expenses need to be clearly defined. With meals and entertainment expenses, it’s tempting to try to claim more than may make sense – and that may trigger serious red flags. If your business meals are legitimate and not personal in nature, they’re acceptable; however, you must have receipts and appointment information to prove that.

#5: Be Honest

Honesty is extremely important to me. It’s something I look for in my team and my clients, and especially important when it comes to taxes and the IRS.

Being dishonest opens you up to an audit, and lying to the IRS will only further hurt matters. We all make mistakes, but make sure you are forthright with everything you do, or you could be facing painful consequences.

Reach Out to Us Any Time

Of course, SBS is here to help make sure you are prepared for an audit. We know how sensitive this subject is, and we will guide and help you through the entire process.

Contact us today to get started, or to learn more about how we can help.

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