Running a business means keeping track of finances, including taxes. If the Indiana Department of Revenue (DOR) selects your business for an audit, preparation can make the process smoother. Knowing what to expect helps you stay organized and compliant.
Gather essential records
Start by collecting all tax-related documents. Auditors typically review income statements, expense records, payroll records, and sales tax filings. Keep copies of invoices, receipts, and bank statements to verify transactions. Indiana law requires businesses to maintain records for at least three years, so ensure you have everything from the relevant period.
Review tax filings for accuracy
Before the audit, check previous tax returns for mistakes. Compare reported income, deductions, and tax payments with financial records. If you find errors, be prepared to explain them. Keeping detailed records of business expenses and deductions can help clarify any discrepancies.
Understand Indiana tax laws
Familiarize yourself with Indiana tax regulations that apply to your business. Common audit areas include sales tax collection, withholding taxes, and deductions. The Indiana DOR may request additional information if they notice inconsistencies. Knowing the rules can help you address concerns quickly.
Cooperate with auditors
Respond promptly to audit requests and provide clear documentation. Keep communications professional and organized. Indiana allows businesses to appeal decisions if they disagree with audit findings. Understanding the appeal process can help protect your interests.
Maintain good record-keeping habits
After the audit, implement best practices for tax documentation. Keep digital and physical copies of records, reconcile accounts regularly, and review tax filings before submission. Staying organized reduces the risk of future issues and ensures compliance with state laws.
