Even if you maintain all of your records in the best manner possible for your business in California, there is a chance that you could be audited. Here are a few ways that you can prepare if you receive a notice.
Before the meeting
When you receive the notice that you’re going to be audited, it’s important to begin gathering documents that have been used to file your taxes. A detail to remember about tax audits is that you might need to show information from the past several years instead of just the most recent filing period. The documents can be organized according to the most recent year that has been filed and going backward or by income amounts. Maintaining neat records can be beneficial so that it’s easier for the auditor to review all of the details.
What to take
If you’re going to meet the auditor at another location, such as an attorney’s office or the tax office, there are some things that you want to have on hand. Some items can be mailed or faxed before the audit takes place. However, the most recent bank statements and receipts, any books and records that you have of business transactions, and any diaries that pertain to your business can be taken to the meeting in person so that they don’t get lost in transit.
Even though your business is being audited, consider taking your personal financial information as well. This can help the auditor determine what income was filed for the business itself and what was filed for your household in order to ensure that nothing was transferred when it shouldn’t have been during the filing process.
Although a business audit can sometimes seem overwhelming, it can be a simplified process if you’re organized and maintain adequate records.