Avoiding An Audit
Posted on March 5, 2021

“I’m ‘breakin’ rocks in the hot sun. I fought the law and the law won.” -Bobby Fuller

Most business owners are working hard and just trying to follow the rules. But getting an audit letter is enough to make anyone sweat!

Here are some tips to avoid an audit:

Do your books on a regular basis. You can have someone (like me!) do this for you or you can DIY if you know what you’re doing.

Organize your receipts. You can save paper files and electronic files. Bookkeeping software makes this easier than ever. You can attach electronic receipts to the transaction in QBO. You can also save them in Dropbox or some other secure place. It’s best to organize each year by month. Depending on your business, you may want to have even more subcategories.

Pay with cash or at least don’t charge it. By paying only with cash, you’ll decrease your expenses and only buy what you really need. Some vendors will even give you a discount if you pay with cash!

Self “audit” your books. You can DIY this or hire someone. Basically, you want to make sure all income is reported as income and you aren’t counting non-business expenses on your books.

Keep immaculate records. Hold on to everything that is part of your business: tax records, bank and credit card statements, invoices, receipts. The IRS outlines what should be kept and for how long. https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping

Finally, have a good CPA filing your taxes! A reputable firm will keep you straight and be able to handle any letters that come from the IRS.

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Sullivan’s Island, SC