As a small business owner, it is so crucial for you to take advantage of the latest in IRS technology while paying taxes. This valuable knowledge can keep you in the clear of any surprise audits. The changes in technology help with the use of artificial intelligence, better use of data capabilities, initial risk assessment, and standardization and consistency.
New IRS Tech Overview
Over the last decade, there have been many changes in IRS tech to help with paying taxes, and they’re for the better. Software and hardware solutions have reduced or even eliminated many manual tasks and audit processes in order to streamline data collection. The pandemic has also allowed for lots of auditors to work remotely.
“Same as Last Year,” otherwise known as SALY, is a common concept when it comes to auditing mainly due to the repetitive nature of the auditing processes. That’s why robotic process automation software is now used for consistency as it guarantees that a larger volume of work is done correctly.
The repetitive processes that are usually done by humans are now replaced by software that eliminates any human error. An example of this technology is KPMG’s centralized audit platform, KPMG Clara.
The risk assessment phase is an important part of every audit. This phase is improved by the new IRS tech that includes better data pipelines, cloud storage, and other technologies that enhance the risk assessment process and make it easier for everyone. The auditor can identify risks faster and focus on the most important factors of the audit.
The Data Solutions Center (DSC), focuses on data analysis testing and tools. DSC has plenty of templates that analyze data quickly so there are less mistakes and more accuracy overall.
AI and Machine Learning
AI and machine learning are big aspects of accounting and auditing. For example, if you can use an AI-based program that can read documents and summarize them, you can save yourself a great amount of time. KPMG even has a tool that reads business agreements and contracts to look for any information that’s relevant to audits.
Steps to Prepare for an IRS Audit
In order to prepare for an IRS audit while paying taxes, you have to verify that everything about your small business is organized. Even if you won’t be audited, it’s always a good idea to keep your information up-to-date.
- Consider hiring a CPA who can detect an audit up to six months in advance.
Elevated CPA utilizes software that connects directly with the IRS. This software has the power to view any new updates or changes to an individual or business account. It can provide an opportunity to amend prior returns as well as look for penalties and fines that can be abated legally.
- Plan for your audit.
Keep your fiscal records up-to-date throughout the year just in case.
- Keep up with all accounting standards.
Accounting standards and legal requirements are updated each year, so it’s best to keep these in mind. Staying updated reduces the time needed to track data and make any necessary changes.
- Organize your data.
Make sure you have all the correct data from your small business such as organizational changes, invoices, bills, fiscal year budgets, transaction records, financial statements, and more.
- Hire a professional, immediately.
Check out Elevated CPA, where we can help you every step of the way!
Why is it important to prepare for an audit?
Preparing for an audit is always important because it allows you to see where your business stands at any point. This helps you avoid mistakes in reporting as well as any fines associated with those mistakes. Preparation can keep your business more organized overall.
Now that you know how to prepare for an IRS audit in the most efficient ways, you can schedule a 15-minute introductory call with us so we can add our personal touch and prepare your small business for any surprise audits from the IRS. At Elevated CPA, we can help you with tax tips, accounting, and so much more!