Everything You Should Know About Business Auditing
What is auditing?
Auditing is merely the IRD examining your financial affairs to check if you are complying with their tax laws, and that you have paid your taxes. A lot of New Zealand business owners believe that their chances of being audited are slim, that they don’t need to worry about it. Wrong! IRD has every right to raid homes and business premises, especially if you fall on their wrong side. It is a very expensive place to be. Smart business owners understand that this is a risk not worth getting into.
If yours is a small or medium business with a turnover of up to $100 million, you will be audited.
If yours is a large enterprise with a turnover of over $100 million, you will be audited, reviewed and scrutinized minutely in all your tax affairs.
IRD will select you for an audit based on any of the following reasons:
⇒ to analyse your business accounts or tax returns.
⇒ to check someone else's records and match them to your records.
⇒ information received in another audit suggests you should be checked.
⇒ non-compliance with tax laws in the past.
⇒ late or non-payment of taxes in the past.
⇒ selected a particular industry.
⇒ for examining issues that are affecting other taxpayers.
⇒ the particular area where you live or run your business.
⇒ media reports or unexplained wealth.
⇒ information received from other people about you.
⇒ random or no particular reason.
There is no set time-frame for an audit to be complete, especially if it is affected by:
⇒ the size of your business,
⇒ the complexity of your business,
⇒ the standard of your records, and
⇒ your cooperation.
A lot of the hindrances can be dealt with by yourself personally, but record keeping, invoices, maintaining proper documents and being on time with tax dates are some stressful areas Accounting4Me can help you out with.