Starting to think about your resolutions for the new year? Well, we’ve got the perfect suggestion for you: make a commitment to make 2021 the year that you stay organized for your CPA. Whether on a personal level or for your business, staying on top of your finances with your CPA can make a huge difference in the event of an audit.
Maintaining a good organizational system with your CPA can make or break the outcome of an audit. Working closely with a CPA has the power to decrease the chances of being audited in the first place by ensuring that your taxes are prepared with as much accuracy as possible. Partnering with a CPA inherently increases the credibility of your return. That being said, it’s not impossible to still be audited. If this is the case, you’ll likely need more help than your CPA is able to provide you with.
Not only is financial organization critical to correctly filing a tax return, but it’s also necessary in the event of an audit. When you are notified of an audit, you have ten days to initially respond. Now’s not the time to panic, rather it’s time to buckle up and identify your supporters. One of the first things that IRS or EDD will request is additional paperwork and verification of all records. Some records they may request include:
- check registers
- canceled checks
- bank statements and annual financial statements
- federal and state income tax returns and employment tax reports
- payroll records
- W-2 and 1099 Forms
- ownership verification
- and any other forms, records, or statements pertaining to your business
Your CPA is an important partner in the process of an audit but isn’t the only person you need on your team. When you’re picking your fantasy football team your all-star quarterback is nothing without a talented running back to complete a play. Your tax team is no different. It’s important that when faced with an audit you immediately reach out for support from a tax specialist such as John Milikowsky.
As audits ramp up and banks ask for background info, it’s extremely beneficial to already have your ducks in a row for your CPA. Our team at Milikowsky Tax Law can not only help you prepare for an audit but can also partner with your CPA to strategize if you’ve already been notified of an audit.