How small business accounting software can help during an audit
Many small business owners irrationally fear an audit because they record their income and expenses themselves. Using small business accounting software is an easy way for relatively inexperienced business owners to stay on top of their company’s finances and prepare their books for an inevitable audit.
An auditor’s job is to ascertain whether a company has declared all of its income and that all credits, deductions and exemptions are justified. If a business is being run honestly, and there are no deliberate inconsistencies, then an audit should run smoothly.
The following four tips can help to minimise business owners’ stress levels during an audit, and also help to provide positive results. Small business accounting software from QuickBooks can provide small business owners with the information necessary to prepare for an audit.
- Keep accurate records
The most important tip is to keep up to date with your day-to-day bookkeeping. All transactions should be recorded as and when they occur, in order to minimise confusion at a later date. Small business accounting software, such as QuickBooks Pro, is a convenient way to document income and expenses.If all of your documentation is kept in good order, it is easy to notice any discrepancies, and correct them accordingly, well before an audit takes place.
- Store records for 7 years
A business should keep all accounting records for up to seven years before disposing of them. These records should be kept well organised and easily accessible. If your auditor asks for a specific document, it should not be a laborious process to find the correct information.Small business accounting software keeps all inputted information in an easy-to-access electronic format. This makes it effortless to provide your auditor with any desired documents and information.
- Do your own internal audits
It is very useful for small businesses to do regular internal audits. This will help to highlight any problem areas in their accounting process and correct them before the government decides to audit. The more accurate your accounting documents are, the faster and easier the official auditing process will be.Internal audits are also an excellent way for business owners, particularly those who do their own accounting, to learn more about the bookkeeping process. It is understandable that a small business may not be able to afford an accountant and the owner might be required to do the accounting. Mistakes are a part of the learning process and it is far better for errors to be highlighted in an internal audit than by a professional auditor.Internal audits are made much easier if a company uses small business accounting software because all the data is laid out in an easy-to-understand format. It is also simple to correct any errors once they have been discovered.
- Prepare to justify big expenses
The purpose of an audit is for the South African Revenue Services (SARS) to assess whether a company has declared all of its taxable income. If an auditor uncovers an income or deduction that they do not understand, the person responsible for the business’s accounting will be required to explain why there is an inconsistency.If a company uses small business accounting software to keep track of its finances, such questions should not be difficult to answer. Software such as QuickBooks Premier provides a business owner with all of the company’s accounting information at the touch of a button. With a business’s financial details easily available, all queries should be quickly resolved.
Prepare for an audit with QuickBooks’ small business accounting software
An audit does not need to be a scary experience. If you run your business in an honest manner and don’t try to avoid paying taxes, your audit should not be too much of a hassle.
Accounting software can help you to run your business and keep your finances in order. Contact QuickBooks now and get your company’s finances in order with our range of small business accounting software.