As a business owner it is imperative that you retain thorough records of all transactions that pertain to your business. If the state sends you a sales tax audit you will need more than your cash register tapes in order to deal with the audit.
You can choose to hire an attorney to represent you and appear on your behalf at the audit, or you can opt to deal with the state taxing authority on your own. An attorney can provide you with expert representation and will be familiar with all of the laws that pertain to sales tax legislation within your specific state.
Many business owners are under the wrong impression about sales tax audits. They do not realize that the government may request that the business owner produce documentation concerning a number of financial information sources.
These documents may include any information from your business’s bookkeeping, any information about tax exempt sales, and any records that document your business operations.
In order to guarantee that your business will never have to worry about not being prepared for a sales tax audit, you must diligently keep records of all your business transactions. Keep every document that supports your bookkeeping records or computerized records. You should keep hard copies of all sales invoices, purchase invoices, purchase orders, and bank statements.If you deal with customers that purchase items on a tax exempt basis you need to keep copies of resale certificates and exemption certificates.
Finally, keep any other type of papers that support your business records.
These would include sales journals, income statements, and all state and federal income tax returns.
Even though you may have detailed records regarding the information that is on any of these documents, you will need to furnish the government the original documents in order to prove your case. Set up some file cabinets and develop a storage system in order to keep track of all of this information.
Obviously, comprehensive and organized bookkeeping will be your best defense against a sales tax audit. By keeping all of your records and organizing them in a way that makes them easily accessible, you will be prepared to face an audit.
But if the audit happens, an experienced tax attorney can significantly increase your chances of the audit going in your favor. Hire an experienced and professional attorney familiar with the state laws regarding sales tax so that you can defend your business.
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