As an entrepreneur or otherwise self-employed worker, you may have had to deal with many issues that individuals employed by others may not have had to handle. Many of these aspects may relate to financial areas of your job, as you have likely had to ensure that you obtain payments and address tax considerations as necessary. Because you are on your own, you may worry about how possible mistakes could impact your business and personal state of affairs.
Keeping thorough financial records and filing your tax returns properly could help you keep your affairs in order. However, you may still find yourself the subject of an Internal Revenue Service tax audit. When you receive notice of the audit, you could feel a sense of panic. Luckily, you can prepare for the process and obtain assistance if you wish.
Request for records
During the audit process, the IRS may request that you provide several documents. These documents may allow your auditor to validate the information you provided on your tax returns. By keeping your financial records in order, you may be prepared to mail or present these documents as you likely used them when completing your tax return in the first place.
Though you should provide the requested information, you should not send original documents to the IRS. Instead, make copies of the records. Some of the documents that the IRS may request include:
- Loss documents — If you claim business losses, such as theft or damage, you may need to present insurance reports, records of the damage, loss appraisals and other similar information.
- Receipts — These records may also prove useful when it comes to proving that your reported costs were not inflated or otherwise misrepresented.
- Travel tickets — If you made any business trips and deducted costs from your income, you may need to provide those tickets and other evidence of travel-related costs.
- Canceled checks — In some cases, several canceled checks could point to acts of fraud. Therefore, you may need to put copies of the canceled checks with bills they went towards and reimbursement records.
These items represent only a few of the documents the IRS could request during an audit. The organization of these records could go a long way in moving your case forward more quickly. If you have concerns about facing a tax audit and the records you need to provide, you may wish to enlist the assistance of a Connecticut attorney.