A step-by-step guide to help you if your small business gets audited:
- Your small business will get a letter from the IRS or state tax department informing you that your records are being “examined.”
- Call your accountant and have them draw up a special “power of attorney” form to be filled with the IRS or state conducting the audit.
- Your accountant will work with the agent to determine the documents to be provided, and to limit the scope of the examination.
- Gather all the requested documents for your business including W-2s, 1099s, invoices, bills, bank statements, and other records of your company income and expenses.
- Send the documents to your accountant who will compile a binder of all the information and provide a space for the auditor if needed.
- Your accountant will help to answer questions. If the auditor requests an “on-site” visit to your business, your accountant will schedule the meeting with you and come along to ensure that the auditor does not delve into areas outside the scope of the examination.
- The examination report will be sent to you and your accountant by the agent with any proposed changes to income or taxes, along with instructions on how to appeal, You will usually have at least 30 days to decide whether to accept the report’s finding or appeal.
- You survived your audit.
If you have any questions regarding any of the steps or about your small business, please contact us at firstname.lastname@example.org or 703-591-5200.