Many people dread hearing the phrase, “You’re being audited” and it is definitely an understandable feeling.
Being audited could get you and your business into a lot of trouble if you haven’t been keeping up with your paperwork.
But being audited doesn’t have to be a scary thing, if you are prepared. That’s why we put together this “audit 101” post to help you feel confident if you should ever run into an audit.
What Is Auditing?
In simple terms, an audit is a formal check of financial accounts whether for a business or an individual.
An auditor contacts you with a request for documents.
This is usually the point where business owners start to feel the stress rise. The don’t know what to do and this is also when business owners start to fall victim to their own ignorance, for lack of a better term.
The reality is that, unless you have a good working knowledge of how the audit process works, you will likely end up paying money that you don’t owe.
The audit process is fairly straightforward. These are the six steps:
The problem most people face when being audited starts right around step number 1. The freak out when the auditor requests the documentation.
Should You Buy Audit Insurance?
Some tax preparation companies offer audit insurance as a way to easy the mind of worried tax payers. But the odds of even being audited are fairly low so it doesn’t really make financial sense to pay for audit insurance even if the fee is a small amount.
For example, some tax services and softwares available on the market offer a type of tax audit defense program starting for as little as $40 a year but can range up to about $300 per year.
Still, to the average taxpayer who lives in horror of being audited this seems like a great deal…
Until you find out that only about 1% of individual taxpayers get audited, and for the average American who earns less than $75,000 annually those rates drop.
On the high end of the spectrum, those who earn as much as $5 million per year only have about a 10% chance of being audited.
Audit Help Is Here For You
Now that you know that you are highly unlikely to be audited, let me tell you what you can expect if you are one of our clients.
We have spent 30 years in the insurance industry looking after our customers wherever we can. One of those areas that we focus on is Audit help.
We provide audit assistance to our clients that feel the need for help should they be selected for an audit.
As soon as you find out that you are being audited give us a call.
Don’t contact the auditor to ask questions as this will only cause potential problems during your audit.
An auditor is not their to help you understand the audit process so your first call should be to us.
We help you with the jargon, as well as allow you to have your audit hosted locally in our offices to give you the confidence to successfully navigate the audit.
We will walk you through the process so that you understand what to expect and what you will need to get through your audit successfully.
When you become a client of ours, we always want to make sure we have your best interest in mind and audit assistance is just one of the services we provide.
Join Us Today!
If we don’t have your business already contact us immediately. If you earn $200,000 per year you are more likely to be audited and the average audit ends up costing over $10,000.
We can help you have peace of mind just by having a policy with us.