A few weeks ago I wrote a post about the fact that 3 businesses that I know had been selected for an audit or review.  The first was a client of mine who operates 4 restaurants, one was a brand new client who had been undergoing the audit process even before he started using our services, and a client who is an event planning company.  To read that post, click https://affordablebookkeepingandpayroll.com/?p=1404.

The client who owns all of the restaurants was not afraid of being audited because he  knows we do report every penny he makes and all tax is remitted properly.  However, I am sure he was frustrated with the fact that they had requested documents for 2010 through 2012.  The Board of Equalization wanted to see every bank statement for those three years  as well as all of the sales data.  As my client has different bank accounts for each store, and each payment type goes into a different account (cash, credit, debit) it meant we had to send him about 12 statements per month for all 3 years.   This was a very time consuming process.

Because of the vast amount of paperwork, we had to create zip files by year and send to the auditor.  Besides communicating with us, the auditor also was in communication with the CPA who prepared the tax returns.  Of course our time isn’t free, so my client had to pay us both to prepare all of this documentation for the audit.

My client just faxed me a letter he received from the Board of Equalization stating that all records appear to be in order and that all sales tax returns we have filed were correct.  There will be no changes, and no tax is due.  We of course knew this would be the outcome, but the cost to my client to prove this was unnecessary.  Had they asked why his income tax and sales tax figures did not match, rather than immediately deciding to do an audit, we could have explained he is operating in two states and the California sales tax return only listed sales in CA.  No audit would have been necessary.

I’m hoping the other two clients’ situations turn out as well.  The paperwork for the review of the event planner was sent to the auditor a week ago, so it will probably take a little time for him to review.  I’m expecting to hear the same great news for them as I did for the restaurants.

Are you doing your own bookkeeping and the thought of an audit scares you?  Contact us today to assist you with your bookkeeping and get peace of mind!  310-534-5577 or [email protected].

Candy