The Right Time to Think About a Tax Audit is Now

Ah, it's that great time of year when the Cleveland Cavaliers are playing, the Browns are playing, and the Indians are laying plans to revive themselves in spring. Perhaps best of all, the Internal Revenue Service is in its late autumn slumber, ready to hibernate for the winter. Right?

Not quite. The IRS never sleeps. A spokesperson for the agency recently reminded taxpayers that with "just a little effort," you "can avoid headaches at tax time by keeping track of your receipts and other records throughout the year." He was talking about a tax audit, of course, which can be an enormous headache, especially for Ohio business owners.

What sorts of records should you keep in order to be prepared for a tax audit? While you're doing your late-year tidying of business records, you should be sure to hang onto the things the IRS says you ought to have on hand.

First, keep documents that an agent can read and see the gross receipts (amounts and sources), including receipt books, deposit statements, invoices, cash register documents, etc.

You'll also want to have records of purchases (items bought and then sold to customers), including canceled checks, documents showing electronic fund transfers, credit card statements, invoices, etc.

Also on the must-have list, the IRS says: records showing your business expenses (costs of running your business). These documents include credit card statements, account statements, petty cash statements, canceled checks, etc.

In addition, also have at the ready documents detailing assets, including price paid, depreciation, sale prices, use of assets, etc. Last, but certainly not least, have documents detailing employment taxes.

Please remember that you have the right to appeal the results of an audit with the assistance of an attorney. The appeals process can be a complex one. An experienced tax attorney helps protect you, your rights and your assets.