Navigating IRS Audits: What Business Owners Should Know

​Receiving notice of an IRS audit can be an overwhelming and stressful experience for any business owner. An audit indicates that the Internal Revenue Service (IRS) is reviewing your financial records to ensure compliance with tax laws, which can lead to penalties if issues are discovered. While the audit process can seem daunting, the most critical piece of advice is simple: do not communicate with the IRS directly. Instead, hire a Certified Public Accountant (CPA) to manage the process on your behalf.

​What Happens During an IRS Audit?

An IRS audit is a thorough examination of your financial records, aimed at verifying the accuracy of your tax return. This includes checking if you’ve properly reported all income, followed applicable tax laws, and accurately claimed deductions. Various factors may trigger an audit, including unusual income patterns, large deductions, or inconsistencies on your tax return.

​The IRS typically selects individuals or businesses for audit based on red flags, but audits can also occur randomly. Business owners, in particular, are more prone to audits due to the complexity of their financial situations. Once an audit is initiated, you will need to provide supporting documentation to substantiate your tax filings.

​Why You Should Not Handle the Audit Yourself

​One of the biggest mistakes a business owner can make is trying to handle the audit themselves. While it may seem tempting to respond directly to the IRS, this can lead to serious consequences. Communicating with the IRS without professional assistance can result in unintended admissions, providing contradictory information, or even unknowingly making errors that escalate the situation. These missteps can lead to severe financial penalties, increased taxes, and, in extreme cases, legal consequences.

​How a CPA Can Help

When facing an IRS audit, a seasoned CPA is your greatest asset. Here’s how a CPA like Larry Bradford can assist you:

1. Communication with the IRS: A CPA will communicate with the IRS on your behalf, ensuring that all correspondence is handled professionally and correctly. They know what information is required and how to present it in a way that minimizes risks.
2. Protecting Your Interests: A CPA will thoroughly review your tax return and financial documents to identify any potential issues before submitting them to the IRS. This allows them to correct errors or clarify complex transactions in advance, reducing the likelihood of penalties.
3. Navigating Deadlines and Requirements: IRS audits come with strict deadlines, and missing these can lead to automatic penalties. A CPA will keep track of important timelines and ensure that all necessary documentation is submitted on time, preventing further complications.
4. Minimizing Financial Impact: CPAs are skilled in tax law and can identify ways to mitigate the financial impact of an audit. Whether it’s negotiating with the IRS on penalties or finding allowable deductions, they work to save you money and protect your business.

​Don’t Wait – Hire a CPA

If you’ve received an audit notice, the best course of action is to immediately hire a CPA. The IRS is a powerful federal agency with vast resources, and navigating an audit without professional assistance is risky. By hiring a CPA, you gain peace of mind knowing that an experienced professional is protecting your interests and managing the process efficiently.

​With over 40 years of experience, Larry Bradford, CPA, well-equipped to help business owners navigate complex IRS audits. Don’t risk handling it alone—contact Larry Bradford today to ensure your audit is resolved swiftly and with minimal disruption to your business. Call 512-402-0049 or send an email to [email protected] to set up an appointment.