Inside Small Business | Small Business & Home Business Marketing

How to Survive an Audit

by goWholesale.com

In life, audits happen. While you may do everything you can to keep your business in line and on the straight and narrow, trying to stay under the radar of the IRS, it could just be an unlucky draw that has your company up for an audit.

If you were to get that notification, what would you do? Don’t know? This article can help.

What IS an Audit, Anyway?

An audit is essentially the IRS saying they’re not so sure that you have accurately reported your income to them. This could mean they think you “forgot” to mention some money that came in, or that they think you “exaggerated” appropriate spending and deductions to make your bottom line seem lower. Either way, you have to prove you’ve done everything right.

Unless you naturally prepare for an audit annually, you are going to want as much time as you can to get ready. When it comes time to set an audit date, try to push it back as much as possible. Also try to keep the audit out of your workplace. These kinds of things are a distraction to others at work. If you work alone, from home, you don’t need them nosing around. Instead, ask to have the audit at the IRS offices, or better yet - at your accountant’s office.

Get Ready, Set….

Now you need to be in the right mindset. Chances are if you are being audited, the IRS is pretty sure you owe more than you said you did and they are going to try and get their money. You should go into this prepared to pay, if needed; but the key is to pay as little possible.

Now it’s time to really do your homework. If you have an accountant, give them a call, as they are going to be in this with you since their name is signed to the document. This is good, because they are going to likely have more expertise in this field than you do. Seek their advice on how to make it through this.

If you don’t have an accountant, this is your fight alone, and you need to be prepared for it.

Find Your Paper Trail

Every last slip of paper that proves what you made and what you spent this year is going to count in an audit. While most businesses keep decent track of this, there is always room for improvement. It’s always important, even if you’re not being audited, to keep your financial documents as organized as possible.

See what you are missing, try to replace any records that you can’t find but know you should have.

Know the Facts

There are plenty of tax laws on the books meant to protect small businesses, but the IRS doesn’t have to go out of their way to tell you what they are. Do your research. Learn the laws and how they impact your business and your audit.

If much of the information you are reading in tax guides is confusing to you, or not clear enough to let you know how it impacts your case, you should get in touch with a tax professional to make sure you understand them.

TMI (Too Much Information)

A lot of people go into audits talking about their business and their spending and deductions, thinking the more they talk the more professional and ‘on top of things’ they will sound. Not so.

The more you talk, the more the IRS auditor can hear about how you run your business and learn things you may not have wanted them to know. The best rule of thumb is to only speak when spoken to.

If you have an accountant or tax attorney (and you SHOULD at this point), they’ll do all of the talking.

Get Help If You Need It

Once you are in the audit, you still have rights and the ability to walk away. If you feel the auditor is not being fair to you, you can ask to speak to a manager, or call for a recess of the hearing in order to call in a tax professional.

While you may think you can do everything yourself, sometimes it’s better to be willing to call on a little assistance.

Don’t Settle For Just Any Results

After the audit has been completed, you are going to get the results in a report. If any part of the report doesn’t make sense, call the auditor and ask for an explanation.

If you are not happy with the results, and think they are wrong, you can always appeal the report and try again for better results.

goWholesale helps small businesses find suppliers of the products and business services they need to grow. Connect to wholesale suppliers and find valuable information for your business today at www.goWholesale.com.

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Raving Fans and Loyal Customers = More Sales (Pt.4)

A Loyalty Measure for Businesses of All Sizes - Net Promoters

The idea of Net Promoters of your business is a quick and easy way to identify the positive, raving fans (net promoters) vs. the detractors of your brand.

The concept is based on one question: Would you recommend us to a friend or colleague? Then answer is provided in a format of 0 for “extremely negative” to 10 ” extremely positive.”

What does a high percentage say about a company? A higher Net Promoter score has been correlated to a future increase in sales and referral sales. Categories of responses are shown below:

Promoters ( those who answer 9 or 10) are loyal enthusiasts who keep buying from a company and spread the word to their network

Passive (7 or are satisfied but unenthusiastic customers that can easily be lost to competition

Detractors (0 to 6) are unhappy and will stop their relationship with the company at the first opportunity

NPS (Net Promoter Score) = % of Promoters - % of Detractors

Why is this metric important? Especially to a small business.

1. It is easy to implement and monitor over time, it is for all intensive purposes one question.

2. It is easy to score and monitor over time.

3. It is easy to explain and understand.

For more information on Net Promoters: www.netpromoter.com

Loyalty as Part of a Program

The most common form of loyalty is seen in programs from Credit Card or Airline type programs. These are incentive programs, not true loyalty programs. The test of loyalty is if the program discontinued, will the customers stay. If not, it is an incentive. The use of incentives are perfectly fine, however, understand why your customers are staying with your business.

However, non-conventional loyalty programs are less incentive based. They can be internal programs for service, sales or marketing; goals to hit shipping times, quality tests, or customer service levels. It all adds up to loyalty.

It is a key driver of success for enduring businesses, small and large. The importance of knowing your customer groups, their lifecycle, needs/wants that drive their purchase behavior and finally consistent measures of loyalty that correlate to increased revenue. It is a long journey to understand your customer; loyalty is a large part of the journey of that understanding.

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