THE THREE QUESTION TEST TO FIND OUT IF YOUR BOOKS ARE AUDIT PROOF

If the IRS decided to knock on your door, would you be able to prove your books are audit proof? Would you even know where to begin? How soon before the panic starts to sink in?

The truth is most smart business owners leave their books to a professional, but if the IRS is knocking on doors, they aren't knocking on the door to your bookkeeper- and if you do the books yourself, you could be in some VERY serious trouble. 

If the IRS asked you to prove your business was clean and audit proof, how quickly could you get them an answer? There is obviously some nuance to the answer of that question, but I will give you a simple 3 question checklist to get you on your way of gaining confidence in your books- and if you can say yes to these basic questions, then you are well established to audit-free books!

Without further ado:

1) Does every deposit tie back to an invoice, sales receipt, or owner contribution?

2) Are expenses categorized consistently: no ‘miscellaneous’ catch‑alls?

3) Can you trace your bank balance to a reconciled statement?

These can all be verified through reports provided in your bookkeeping software. Quickbooks for example can be navigated in a way where all of these things can be quickly checked... not because of some imaginary IRS agent knocking on your door, but because this is YOUR business and you deserve peace of mind throughout the year, and not just tax season. 

If you don't know how to access these reports, just ask your bookkeeper to walk you through it- they should be more than willing to help you out. It is a partnership, after all!

If you do the books yourself, you should be able to find this as well. If you can't, you might want to consider placing that responsibility into the hands of a reliable person driven to make your business successful! I might know a guy!

It takes just a few minutes to know if you are audit-ready!