All businesses are under the IRS radar and you can never tell when yours shall be picked. Home based businesses are much more visible. If you run your business in an orderly manner by keeping your records upto date, then you are well on your way to being audit proof. The IRS audit is a standard procedure for all businesses and sometimes they may need further clarifications from you. When they come calling, you can further make yourself audit proof by doing 2 more things.
Firstly, the IRS usually gives you the chance to decide on where you want to have your meeting. You can choose your office or their office. Your choice here is important in determining how audit proof you are. Remember, you do not want the IRS radar zeroing in on you, so have the meetings ALWAYS at THEIR OFFICES. You may disagree, but I can assure you that to audit proof yourself further you are not looking for COMFORT but for PROTECTION. If you allow the IRS agent into your business, you are in effect asking for the radar to scrutinize your operation still further and ask more questions. If you have the meeting at their offices you will stick to the matter at hand. Remember, how audit proof will you be if the agents are going through all your offices files?
Secondly, when you go to their offices carry ONLY what is required. You should operate on a need-to –know basis with the IRS at all times. Do not give out any information or documents not related to the matter at hand. IRS agents are notorious at looking for “back up information” when in reality they are looking to hang you. Remember, how audit proof are you if you are a sitting duck?
The IRS always lets you know the reason for a meeting beforehand. With this knowledge you can audit proof yourself and your business from audit nightmares. Whether you are doing a small or big business your prime concern should be audit proof. Isn’t it? Be smart and, since you have every right to be audit proof, above all, ALWAYS be audit proof!