FREE TIPS TO SIMPLIFY YOUR BUSINESS AND UNLEASH YOUR LIFE

5 Ways To Audit Proof Your Business

5 Audit Proof MethodsImagine…you discover the certified letter in your mailbox from the IRS, announcing you have been selected for an audit.  No worries!  Once upon a time, I made a “Slinky-knot” mess out of my QuickBooks™ file.  Fear of an audit – and a growing pile of unpaid bills – encouraged me to get it sorted out.  It wasn’t that hard, once I got over my drama and procrastination.  Let’s get you started!

For last year…

  1. Audit Your Books Yourself…NOW:   Enlist your bookkeeper or accountant to help you.  Go line by line down the Balance Sheet and Profits & Loss reports and look for “weird” things. The intent is to get every account up-to-date and RIGHT as of the last day of last year.  Figure out what you have for Assets.  Review your bank statements to determine your Cash accounts.  Count your Inventory.  Make a list of your Vehicles, Equipment and other Fixed Assets.  Determine what you owe in Liabilities by reviewing your pile of unpaid Bills, your Loans, and Credit Card Statements.  The difference between what you HAVE (Assets) and what you OWE (Liabilities) is what you OWN (Equity.)  Your accountant can, should, help you properly reflect the balances on your in-house Balance Sheet.
  2. “Foot” Your 2012 Tax Return Balance Sheet to Your QuickBooks™ Balance Sheet.  Sit elbow to elbow and ask ask ask questions as he or she enters the adjusting Journal Entries.  Don’t allow a bossy or intimidating accountant to shortcut this process.  Your in-house accounting file should serve as the audit trail for the tax return.  Your job as the Owner is to know what you have for Assets, Liabilities and Equity…and to trust that it is accurately represented on the Balance Sheet.  So press on!

Starting this year…

  1. Use your VISA Credit Card and Debit Card to Create a Solid Audit Trail.  Click through the Help screens in QuickBooks™ and follow the suggestions for entering Credit Card charges and reconciling the statement.  Use your Debit Card instead of Cash.  Make sure you jot down what each charge is for so that you can code the transaction correctly.  This way, you current Cash position and Liability for your Credit Card will be accurately reported.  Nice!  Aim to pay off your entire VISA Credit Card balance monthly.
  2. Switch To a Payroll Service.  If you make a mistake on in-house Payroll – or get behind – the IRS penalties and fines can be capricious and arbitrary.  A Payroll Service, like ADP ™ or Paychex™, keeps you current and accurate by providing simple Payroll reports and submitting the taxes due directly.  They will handle any Payroll audit issues, too!  NOW is the perfect time to make the switch…and put that worry out of your life.
  3. Stay Current With Your Accounting.  This year, make sure you review your financials weekly, and use a Month-End Checklist to nail down the balances by the 15th of the following month.  Download a free checklist here. It’s so much easier to find and fix a mistake in the month you made it.  And, this attention to detail keeps you audit ready!

Should you get audited, remember.. Auditors are people, too.  Provide a nice working space. Bring donuts. Smile. Show the Auditor what you have done to clean up the books.  You are on solid ground when you, in good faith, move from messy to current and accurate financial reporting.

So, no worries.  

Note:  I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business. The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.

Leave a Comment!

2016-12-01T14:55:15+00:00