How to Prepare for an IRS Audit
- Brian R. Schobel, CPA
- 16 minutes ago
- 2 min read
Facing the idea of an IRS audit can feel intimidating, but with the right preparation, it becomes much more manageable. For small business owners, staying organized and understanding what the IRS looks for can make the process smoother and less stressful.
1. Keep Your Records Clean and Organized
Good recordkeeping is your first line of defense. The IRS may ask for receipts, invoices, payroll reports, mileage logs, or bank statements.
Store documents in labeled folders—digital or physical.
Keep business and personal expenses separate.
Maintain updated books throughout the year, not just during tax season.
2. Review Your Tax Return Carefully
Before an audit happens, look back at your tax return to ensure everything matches your books.
Double-check income totals, deductions, and credits.
Make sure large or unusual expenses are supported with proper documentation.
3. Understand What Triggered the Audit
Sometimes audits are random, but they can also be triggered by inconsistencies or missing information.
Look for mismatched income reports (e.g., 1099s not included).
High deductions compared to your income may also draw attention.
4. Respond Promptly and Professionally
If you receive an IRS notice:
Read it carefully to understand exactly what they need.
Respond by the deadline and provide only the documents requested.
Stay calm—an audit doesn’t automatically mean you did something wrong.
5. Consider Getting Professional Help
A CPA or tax professional can guide you, especially if the audit is complex. They can speak directly with the IRS on your behalf and help ensure everything is accurate.
Preparing for an IRS audit is really about staying organized and proactive. Keep your records tight, understand your numbers, and seek help when needed. With the right approach, you can face an audit with confidence—rather than fear.
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