Audit? Don't Panic!
Keep accurate records & be honest.
It's horrible when law abiding citizens find themselves in great fear of any government agency.
Jackbooted thugs dragging business owners away to prison and confiscating their hard earned wealth is the fabric of nightmares, especially for small business owners.
While it's true that being sloppy with your taxes, or worse still, trying to actually cheat on them, opens you up to the full and considerable power of the IRS to force compliance, if you are diligent, accurate and truthful, the IRS is not to be feared, even if you are under audit.
Fear of an audit mustn't keep you from claiming your rightful deductions. The IRS wants to audit you? So what? Keep diligent records and be honest. Get proof letters when you donate to charity. Many religious organizations and churches do this anyway. Keep those letters with your tax records. When you donate yard sale quality goods to a thrift store, value them at yard sale values. Make and keep detailed records of what you donated, and get and keep a letter from the organization.
Think of it like this. An audit is the IRS asking for proof of what you told them in your return. It might be as simple as a letter asking for specific documentation. Notify your CPA immediately of any correspondence you receive from the IRS. Your CPA will review it and advise you on the best path forward.
Keeping copies of the documents used in preparation of your return is vital. Your CPA will return them to you when the return is complete. You can avoid the stacks of paperwork piling up in your office by storing them digitally. The IRS now accepts electronic documents to substantiate deductions. Keep good backups of all your files, preferably in more than one location.
Cheat and expect to get caught! When you're honest, rely on your records to prove it. A great CPA will ensure in advance that your records fully support your return and advise you of any gray area or danger zone.
You don't have to face this alone. Let your CPA represent your interest with the IRS. Your CPA is experienced, knows the law, and knows what records and documents best support your cause. They are best able to handle any issues that arise amid the audit and able to help minimize any negative consequences caused by error, omission, or even past indiscretion.