How to prepare for a business tax audit

For many business owners, the words “tax” and “audit” trigger intense anxiety, especially when you put the two together. Even though the chances of your business being selected for a tax audit are somewhat low, if you’ve been contacted by the authorities for one, there is no need to panic.

The goal of a tax audit is to ensure that the information on your tax return is correct and has been reported as it should. It does not mean you have done anything wrong. In fact, the state may end up owning you money.

If you want to be prepared for a tax audit, here’s what you need to know.

Contact your tax advisor

Your accountant or bookkeeper should know everything about tax audits and SAF-T, which is the international standard for efficient transfer of accounting data. Contact your accountant and ask them to help you prepare for the audit and make sure to do so before responding to the audit letter. They will be able to tell you if this is just a standard procedure or if there are reasons to worry about.

It’s always better to review the letter with an expert than to try and figure out for yourself what the government wants. Sure, sometimes they may give you some bad news, but it’s better to be prepared for the worse and maybe even get a lawyer to represent you.


Ensure you have your records in order

The government can impose penalties if you don’t keep good track of your records, so ask your accountant to ensure everything is in order before the audit. Make sure the records are organized by year and by type (expenses, income, employee pension plans, etc.), so they are easier to find.

Make sure you have kept all relevant records such as credit card records, documents from vendors, or bank statements. If you miss any of these records, make an effort to recover them either by talking to the bank or asking your vendors to resend them. Using a tool such as Microsoft Dynamics can help you get things in order and keep track of everything. Plus, you can back-up everything into the cloud for even easier access.


Prepare all the documents they are looking for

You have probably been notified through a letter that an audit will be set for your business. Make sure to read that letter very well, as it will tell you exactly what documents they are looking to review. Sometimes, it can be as little as an income slip, or a prosjektplan while other times they may ask you for more documents.

Make sure you discuss it with your tax advisor and prepare all the files before the audit. This will give you time to review them and ensure everything is as it’s supposed to be. If you find an error, don’t attempt to alter the files. Simply wait for the auditor to come and explain what happened. You can get away with a warning if you prove an unintentional error has been made.