Tuesday, April 12, 2011

Oh No! It's an Audit!

Oh No! It’s An Audit! by Diana DeAndrea-Kohn

Every day I walk out to get the mail hoping for a check. Most days it’s just more bills, but I still have hope. One day, as I quickly flipped through the mail, I noticed something I don’t usually see. It was a thick envelope from the Department of Revenue.

“Oh no!” I let out.

As I opened it, I felt the fear welling up inside me. Please don’t let this be an audit. Please don’t let this be an audit. I pulled out the letter. Sure enough, it’s an audit.

I rushed into the office to tell my bookkeeping client he was being audited. He assured me it would “be fine.” Be fine? Be fine! Does he not understand what is at risk here? I left his office and ran down to schedule my appointment with the auditor.

As I called to set the appointment I realized my client is like most business owners. There isn’t time to see the seriousness of this event. We all fear an audit, but we don’t prepare as we should. And that, in the long run, will cost.

The thick envelope was filled with instructions. The auditor had a list of everything he needed. I did everything I could to prepare. I gathered every piece of information he wanted. I had everything laid out for him. I cleared my whole day to be there to answer any questions for him. The audit went great. The damage was minimal.

Going through this, I learned some things that could help other business owners.

  • Time Time Time. Take the time to gather all the information the auditor requests. The less the auditor has to hunt for the better. Respect their time. Be prepared. Have everything they need.

  • Don’t delay. Schedule your appointment as soon as possible. The longer you take to have the audit the more stressed out you can become. Save yourself the stress. You already have enough to worry about.

  • Save everything. Make sure you keep all receipts. I know, it’s easy to lose a receipt. They seem so unimportant. But you must realize your receipts are money. If you don’t have a receipt you can’t prove you paid sales tax. If you can’t prove it, you may be charged again. That is worth repeating. If you can’t prove you paid sales tax, you will be charged sales tax again. Your receipts are money. Would you throw your money away?

  • Know your business tax regulations. I understand it’s not very exciting to run around learning tax code. But knowing it could save you thousands of dollars. Take an hour to learn what is taxable and what isn’t. What should you pay tax on verses what you shouldn’t? When do you charge tax? The Department of Revenue has booklets for different industries. It tells you all the different rules and regulations for your business. There are some weird off the wall rules out there. The average small business owner might not know every regulation. With that, some mistakes could happen. Take the time to learn your regulations.
There are many things we have to do on a day to day basis. It’s hard to keep track of each receipt and know every rule. It’s in our best interest to protect ourselves and our business. If we don’t do it, who will?

Diana DeAndrea-Kohn is a small business owner and writing in Kirkland. For writing project you can reach her at http://www.writingilluminated.com/ or her business website is http://www.businsswithflair.com/ .

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