Keeping your bookkeeping audit-ready has a variety of different benefits. One of the primary benefits is ensuring that the correct amount of taxes due are paid, and paid in a timely fashion. This prevents the government from levying late payments and penalties. Keeping audit-ready books also gives you the peace of mind that you need and ensures that your business can withstand the scrutiny of even the most meticulous inspector, even after the passage of several years.
Audit-ready books also allow your business to make informed decisions on a time-critical basis. Let's face facts. The more accurate your financial statements are, the better you will be able to make decisions that are in the best interest of your business. It is also necessary to have your books in order if you are planning on securing a bank loan. Today, we are going to go over some of the things to consider when attempting to make your bookkeeping audit-ready.
Keep Receipts of Every Transaction
In order for your books to be in order, receipts must be kept on every transaction. These documents should support their corresponding entry in your books. These supporting documents should also be organized in a way that makes them easily accessible when it is tax time, or in the event of an audit.
Keep Your Bookkeeping Regularly Updated
Bookkeeping basics dictate that you should keep your books updated on a regular basis that corresponds to the transactions of your business. This means that if your business has daily transactions, then these entries should be added to the books on a daily basis.
Pay Attention to Deadlines
Many regulatory and governmental agencies require that certain documents be filed on a regular basis. Make sure that these deadlines are kept and that copies of any documents you have submitted to these agencies are kept in your books.
Pay Attention To Details
When a business is audited, it is generally due to the fact that the IRS has found discrepancies in the records of the business. This can be avoided by making sure that the income and expenses of your business are properly recorded and put in their proper categories.
Keep Backups Of All Financial Information
This is one of the most important considerations to keep in mind while attempting to make your books audit-ready. You should keep multiple backups of your books and all supporting documents. These copies should be kept in a safe location, away from the original documents. In the event of a loss, these backups will be invaluable and allow you to get your books up and running quickly.
If you keep the above tips in mind, you can rest assured that your bookkeeping is audit-ready. If your books don't meet these requirements, then it is time to institute practices that will raise your financial accounting up to these standards.
