How To Avoid An Audit By The IRS

The call came from a midsize company in need of a bookkeeper. We discovered the client was two years behind in daily entries and three years behind with corporate tax returns.

We began work. The entries were tedious and done in four months. Soon the work was turned over to the CPA who filed the tax returns. We were all happy. The entries were done and the problems were solved.

Soon after filing the corporate tax returns the audits began to flow in. One after another they came. Each agency seeking tax revenue. The client produced the corporate tax returns, and we defended our reconciled transactions.

The scene could have been very different without a professional bookkeeper and an outstanding team of accountants. The client could have prepared the returns with incomplete record keeping and the auditors would have held him liable for every mistake. Each taxing authority had the right to examine and assess based on the accuracy of the returns. The State had the right to revoke the firms articles of incorporation, but the record keeping was sound.

Our bookkeeping was put under scrutiny by the auditors. The result would have been very different if the company had done the work themselves or allowed a spouse or friend to do the entry. Entries that were miscoded would result in a loss of a deduction for each error. Each error could have resulted in the loss of the articles of incorporation on a state level.

Why subject your firm to unnecessary scrutiny by failing to send in corporate tax returns that are not correct?

Avoiding an audit is the result of careful bookkeeping.Correctly coding all transactions.Each transaction must have supporting documentation such as a bank statement, credit card statement or loan document.Journal entries are prone to scrutiny and should only be done by a qualified professional.

The stakes are very high.Persons without training are best advised to leave the work to an outsourced bookkeeping company.