[IMGCAP(1)]It’s officially tax season, and between now and April, individuals and corporations alike will be filing their taxes with the IRS.
An unlucky number of those tax filers will find themselves facing an IRS audit later in the year.
This can be triggered by any number of factors and may even be completely random—especially for businesses. Whatever the reason for the audit, if your business is selected, are you going to be ready?
Will you have the paperwork you need for the IRS’s review? Will you have all of the expense reports and corresponding receipts to show the auditor? Organizing an entire year’s worth of documents for your business can be an exhausting, overwhelming and time-consuming task.
Here are the things that will need to be readily available should an audit occur:
Invoices from suppliers
- Payment receipts for supplies
- Contracts for jobs
- Supply lists for jobs
- Bills and payment receipts for customers
- Employee payroll
- Employee timesheets
If your company uses a program like QuickBooks for invoices and other such items, but is using physical filing cabinets for the bulk of your documents, you might find yourself in a state of panic in case there's an IRS audit. It can take multiple employees up to a full week to get everything in order.
Consider the wasted time and the incredible amount of stress this situation would require. Important work would wait while employees scramble to organize documentation instead. Imagine the potential cost to the company.
Organizations that use document management software have little to worry about if there's an audit. Every receipt, invoice and contract would be saved in electronic format with accessible audit trails.
With optical character recognition and quick search, companies can find documents just by typing in a keyword. And with built-in document retention features, they never have to worry about paperwork being misfiled, lost or mistakenly thrown away at some point during the year. Plus, if your document management software has dedicated auditor access, the audit will go quickly and smoothly, with no time spent shuffling through paperwork to find a requested document.
Minimal preparation would be necessary, and even though an audit is never “fun,” with the right DMS, it produces minimal headaches, and business can return to normal much more quickly.
It’s a good idea to start implementing a document management system in your office now so you can ensure that all of your paperwork is entered and organized well in advance of any potential audit. You’ll have nothing to worry about if you get that dreaded notice from the IRS. And, even if you don’t end up being audited, your office will be more efficient and organized, and you’ll still save time and cut costs in the process.
Matt Peterson is the former CEO of the Lehi, Utah-based document management software company eFileCabinet, Inc.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access