No business owner looks forward to a business tax audit. The very word conjures up images of stern government officials searching through your records with a fine-toothed comb. But the reality is business audits can be a helpful exercise for any business, as long as you know what to expect and how to prepare. Below, Edgewater CPA Group discusses what a business audit is, what to expect during the process, and how to prepare yourself and your company. By the end, you will have a better understanding of how to approach an audit and come out on the other side successfully.
A Business Audit Explained
A business audit is an examination of a company’s financial statements by an independent third party. The purpose of an audit is to ensure that the statements are accurate and in compliance with Generally Accepted Accounting Principles (GAAP). An audit also provides assurance to investors, creditors, and other interested parties that the financial statements are reliable.
What to Expect During an Audit
When you undergo a business audit, the auditor will review your company’s financial statements and accounting records. They will also test your accounting systems and procedures. The auditor will ask to speak with you and your employees and may also visit your business premises. Be prepared for questions and expect to be cooperative if the auditor needs any further information. Preparing all of your financial statements ahead of time is a great way to ensure the process goes smoothly. Finally, you should expect to be patient as the auditor reviews your company’s books and records.
Ways to Apply What You Learn from an Audit
An audit can provide business owners with a number of helpful insights. By understanding what the auditor is looking for, you can correct any errors or weaknesses in your financial statements and accounting procedures. The audit process can also help you improve your company’s overall financial performance. Here are a few ways to apply what you learn from an audit:
- Review your accounting procedures and make changes as needed.
- Correct any errors in your financial statements.
- Take steps to improve your company’s financial performance.
- Learn from the auditor’s comments and recommendations.
Prepare with the Right Team
You should never prepare for an audit yourself, even if you think you have all your financials properly documented. Instead, work with the team of professionals from Edgewater CPA Group in Carmel, IN. Our team will even look at your bookkeeping and payroll. To schedule a consultation for your upcoming audit, call us at (317) 386-7021.