The prospect of an IRS audit can be a daunting experience, especially now that the government is expecting greater levels of accountability. An effective way to beat the stress associated with that dreaded envelope in the mail is to be proactive. While a dental accountant can help to buffer you against an audit, there are a few steps you can take to be proactive.
Get in the habit of keeping up with your tax records year-round to be better prepared if you are targeted. Staying organized is critical. Use whatever personal filing system works for you so you always know where your files and documents are located. Be sure to make both a digital and paper trail for redundancy.
Learn How Audits Work
If you are unaware of what an audit entails, take time to learn about the process. Knowing what questions an IRS examiner might ask or what documents they will want to see goes a long way toward being prepared. A dental accountant can also explain the process and arm you with the knowledge you’ll need to feel confident.
Gather All Necessary Information
Before the audit takes place, ensure you have gathered all documentation that you will need to make available to the auditor. If you believe something is missing, be proactive and contact they vendor for the missing records. When you have all your documents in one place, lay out the information and label it for the auditor. This will help to make the process more efficient.
Beware of Red Flags
If you are a practice owner, you will need to be scrupulous in reporting income down to the penny. Be aware of red flags such as travel, entertainment, and vehicle expenses. Ensure you are substantiating all deductions so that they align with your reported income.
Hire a Dental Accountant
While the tax laws are always changing, our dental accounting firm keeps up with the latest updates. We understand the nuances of deductions in your field and can answer questions in a way that DIY tax software can’t.
Get a Pre-audit Compliance Report
If you have let your bookkeeping become disorganized, or you’re feeling overwhelmed, get on track with a thorough examination of your financial data. Our experienced dental CPA team will help you establish a system and provide the documentation if you are ever faced with an IRS audit.