If your company has been chosen for an IRS audit, a variety of thoughts may be going through your head. However, the best way to respond to an audit is to talk with your CPA to assemble the information necessary to handle the examination. If necessary, a CPA can actually represent the business during the audit.
CPAs Understand What the IRS Wants
A CPA is worth having during an audit because he or she generally has a solid understanding of small business taxes. Therefore, he or she may be able to come up with a defense or a plausible explanation for why a deduction was taken or why information may have been missing on an initial return. This could help a sole proprietor or corporate business owner obtain a favorable ruling after the examination has been completed.
A CPA Can Put Your Situation Into Context
It isn't uncommon for a new company to take a loss in its first year. If the IRS thinks that a loss is suspicious, your CPA could show evidence that it has made a profit in previous months or that it intends to make a profit. It may also be possible for your representative to explain why the company took a loss or why it took a deduction that left it with a net loss.
An additional benefit to having a CPA represent your company is that this person will not intentionally say or do anything that could increase the scope of the audit. This reduces the odds that the company is assessed additional penalties or interest.
Don't Wait to Handle Your Company Finances
Even if a CPA can't help with a current audit, CPA firms Las Vegas could help a company get its finances together. This may reduce the odds that it experiences an audit in the future or make it easier to present a positive picture to lenders or investors in the future.