Just thinking about an IRS audit makes most small business owners feel their pulse accelerate. Horror stories abound, and many of them are true. The legal drama, headaches, anxiety, and stress owed to dealing with the IRS are ordeals all their own. Couple these factors with financial losses potentially incurred by the audit, time lost dealing with hassle, and expenses paid to lawyers, accountants, and other counsel, and you’ve got a pretty ugly scenario on your hands.
If you’ve ever wondered what small business owners really experience when the IRS knocks on their door, here are a few reports we’ve collected from real-life entrepreneurs.
Time Sucking Frustration
One business owner said his primary feeling throughout the process was that he didn’t have time to deal with the headache. When the auditor schedules a start date, business owners turn in three years of financial documentation including QuickBooks, vendor information, tax returns and payroll. Authorities can subpoena additional verification from outside sources if you can’t supply what they need. If the auditor finds any discrepancies, fees and penalties start from the date taxes were due.
Another business owner felt high anxiety throughout the process. He wasn’t sure if his trusted CPA did things correctly. He suddenly realized how complex the tax rules were and that his lack of knowledge might cost him in fees and penalties. His overriding thoughts were, “Why did they choose me? What is this going to cost me?”
When one successful blogger received notice of an audit, he started gathering documentation. He found several years’ worth of documentation stuffed in shoeboxes, requiring hours of sorting. He went online to download financial statements and discovered his banks and credit card companies only had accessible records for a brief window of time, and he would have to request additional documentation by mail. It took over a month to receive some statements. The writer reported he made a few errors, but they were in his favor. While he didn’t owe the IRS, he had to pay his attorney an additional $5,500 for assistance.
If the IRS is auditing your Colorado small business, you don’t have to face the consequences alone. The experienced, qualified team at Highland Tax Group can equip you with an effective strategy. Book a private consultation with our team now: (720) 398-6088.