This audit won’t put me out of business, but it will hurt. Just look at what I have to show them, what I have to do to prepare for their coming:
How many man hours do I need to spend to get these documents for my audit?
2. Bank Statements for all business accounts for the audit period.
3. General Ledgers and Sales Journals for the audt period. 4. Sales Invoices for the test period (4/09 througtii 6/09, 7/10 through 9/10, 10/10 through 12/10 and 1/12 through 3/12).
5. Exemption and resale certificates for nontaxable sales.
6. Purchase journal with expense purchase invoices for the test period (One year 2011)
7. Federal Income tax returns for entire audit period including depreciation schedules.
8. Fixed Asset invoices for the entire audit period.
9. Sales Tax Accrual reports and any supporting schedules and/or invoices for any use tax reported for the audit period. 10.Customer List. 11. Chart of Accounts.
12. Summary by quarter/month of gross receipts — determined by your normal filing period for Sales Tax.
13.Summary by quarter/month of sales tax accrual r payable account, adding back any payments to the Commissionerof Revenue Services – determined by your normal filing period for Sales Tax.
If you are being audited by the State of Connecticut for sales tax compliance you need a full time worker to devote to the process. It is a tax in itself. So you need employees just to deal with the State of Connecticut in addition to hiring employees to make money for the business. You need to keep inventory, which doesn’t make money, and write reports, and write letters, and answer the phone for all the permits and taxes and audits you will have to endure. The only answer is to raise your prices.
And don’t worry about lower priced competition, the State will put them out of business.
Copyright 2012 Kent Johnson
