Some tips for small business owners to help make an IRS audit a little less stressful:
—Don't try to handle an audit yourself. Even if you're tax-savvy, let your accountant or tax attorney — someone experienced in handling audits — deal with correspondence, phone calls and an in-person meeting with the IRS. If you have to meet with an IRS agent, your accountant or attorney should be present. Many tax professionals tell their clients not to speak, offer information or make jokes during an in-person audit. Answer only questions directed at you.
—Keep detailed records of your company's income statements, invoices, bank statements and check images and expense receipts. Make sure they're organized and will be easy for an IRS agent to go through. Haphazard records will only prolong the process and may raise suspicion about how accurately you've reported your income and expenses.
—Keep your records for at least three years from the date you filed your original return, or two years from the date you paid your tax, whichever is later. But the IRS notes on its website, www.irs.gov , that some records should be kept much longer. For example, any papers related to the purchase or sale of property. And some records might be needed long after the IRS is no longer interested, including documents related to insurance. For more information, visit the IRS website and search for "How long should I keep records."
—The IRS site has other information related to audits. Search for "IRS audits."