The word “audit” inspires fear among many people. However, when it applies to businesses, there are many reasons the process may be needed. Your income tax accounting and payroll services partner, Whyte & Associates, Inc., provides prompt small business audit services in Rancho Cucamonga, CA, that are suited to your unique needs.
Here are just a few of the reasons a business may be audited:
- Financial institutions may require an audit as part of a loan. In other words, banks might review financial statements and notes associated with those statements to confirm that you meet various benchmarks to determine your loan-worthiness.
- Franchisors may audit franchisees to assure best practices and, organizational standards are being upheld. These audits can be a vehicle for the parent organization to ensure compliance among geographically disparate locations and owners.
- The U.S. Department of Labor can hit organizations of all sizes with an audit for a variety of reasons at any given time; for instance, if one is granted is Paycheck Protection Program (PPP) funding, the loan may be audited (reviewed). This is a timely example as many PPP recipients have been transitioned from navigating the application process to navigating forgiveness rules. Likewise, the DOL has an entire wage and hour division that is tasked with reviewing payroll, employee records, and employee workplace rights to enforce federal labor laws.
- Likewise, there are many reasons the IRS or another agency might be “triggered” to take a closer look at your financial data. Some of the most common reasons your business may be audited include – failure to report income in its entirety; underreporting (or inaccurately reporting) sales or use taxes; consistently claiming losses (never showing a profit); lack of compliance with employment taxes; and deducting personal expenses. In fact, expenses related to dining, entertainment, travel, and vehicle are most frequently problematic. These expenses generally require more documentation to stand in the event of an audit.
As your financial partners, Whyte & Associates helps you avoid all of those audits that are avoidable. A little organization and foresight can go a long way to help you avoid overlooked or erroneous information that may trigger a second look from the IRS or another government agency. It also helps to put you in the most favorable position when seeking funding or when your franchisor is assessing the health of your operations. Our team is standing by to support your team. Call (909) 575-0080 to schedule a consultation at our Rancho Cucamonga, CA office.
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