Four years ago, we lived every small business owner's nightmare. It was horrible. The process took months, we couldn't find any of our record keeping, and I was exhausted and drained from a move. We were definitely not set up for success.
We only had 30 days to dig up records from both my husband's construction business and my handmade business.
I learned a lot from this, including how to keep our records straight for tax season. If I can recommend any one thing from this experience, it's this:
Write every thing you purchase on them. Especially if you get any business materials from Hobby Lobby.
Are you a Hobby Lobby shopper? Do you know what I'm talking about? If not, go grab your latest Hobby Lobby receipt.
There are no product descriptions! They only give categories, like "crafts," or "sewing," or "home decor." Not very specific, huh?
Why does this matter? Well, when we were getting audited, the IRS actually...
It finally happened, the ever-dreaded IRS audit. We knew that after 15 years in business it would happen sooner or later, but it just so happened to occur at the worst possible time.
We had just sold our house and everything was in storage. We changed out address but didn't have a mail box yet. Everything happened at once, and although I felt very unprepared and overwhelmed, I took it head on.
So, in case you have never been audited, this is how it goes:
You get a letter in the mail saying that you have 30 days to provide them with the information requested. In our case, they scheduled a phone call. Sometimes they request that you appear at their office or schedule a video chat. I thought this would be a breeze, but this is where what I learned what comes in to play.
1. When they ask you to explain your business, such as what do you make and sell or what services do you provide, list every single thing.
Why, you ask? Because when they go through the receipts and...