If you’re running a business in Minnesota, you might encounter an IRS audit, or multiple ones, at some point. While you can embrace the best practices to fly below the radar and keep your chances of getting inspected by tax collectors to a minimum, you can never really protect yourself from the authority completely.
This is why you should always ensure everything on your tax return is correct. Whether you hire an experienced tax preparer or handle tax-related tasks yourself, a single oversight could spell disaster.
Other than double-checking the details on your return to reduce errors, here are other ways to pass an IRS audit:
Provide Complete Documentation (Plus Explanations, If Necessary)
First and foremost, proper documentation is paramount. With no or inadequate papers, it’s impossible to convince the authority that you’re telling the truth on your tax return. IRS audits are done objectively; your records are the only reliable piece of evidence to back your tax return details up. In most cases, opening a business bank account in Bloomington, St. Paul, or Rochester is necessary to monitor and document your finances thoroughly.
If the IRS auditors aren’t still satisfied with the papers you provide, be ready to complement them with reasonable explanations. Until you can explain certain inaccuracies, it’s hard to get off the hook during an audit.
Use Exact Numbers Always
Discrepancies happen when you round numbers off instead of being exact. In accounting, there’s no room for a single inaccuracy; and when it does happen, the numbers are usually not written precisely. No matter how much it is, never write it on your tax return a penny more or less to avoid unnecessary stress and error.
Leave No Space Blank
Sometimes, the cause of an audit is a line not filled in. This is a big no-no; you should leave nothing blank, or else you let the IRS make misguided assumptions. A zero or dash is always more acceptable than an empty space.
Ensuring all of your records are absolutely accurate is no easy task. Especially if you don’t have the means to hire professionals to take care of it for you, it takes discipline and consistency to get the job done correctly.