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Preparing for a business audit

Some companies in Georgia may have experience with IRS business audits. Although these audits have the potential to be stressful experiences for business owners, it may be possible to mitigate their operational impact through careful preparation and planning.

During an IRS audit, there are a number of documents that a business may be required to make available. The IRS will often require the production of any and all electronic and online records related to the business, such as receipts and bank statements. In addition, it may be necessary to supply copies of the leases to any properties the business has rented or purchased, as well as whatever ledgers or appointment logs are available. Transactions made in cash may need to be validated with documentation such as petty cash vouchers and receipts.

Before an IRS business audit begins, there are some measures that can be taken to facilitate the process as much as possible. For example, the business might wish to organize its documents as neatly as possible in order to generate credibility with the auditor. If the business has claimed any deductions or credits on its tax returns for the years in question, these will likely need to be supported during the audit. In such a case, it may be advisable to research applicable tax laws or supply documentation that establishes why the deduction or credit was claimed.

A business undergoing an IRS audit may wish to secure some form of legal representation before it is scheduled to take place. An attorney may be able to help review the circumstances of the business to identify areas that may be of concern to the IRS and resolve these wherever possible. In addition, an attorney might also help to justify claimed tax exemptions by the production of appropriate documentation.

Source: FindLaw, "Business Auditing 101", accessed on Jan. 20, 2015

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