What is tax audit and why is it important?

Category: Finance 17 0

Tax auditing is a procedure where a professional, who may be internal, of the company’s own team, or external, an outsourced professional, conducts a series of tests and conferences to make sure that your company is calculating and paying indirect taxes correctly, and on time. In some cases, this audit can also take place through a government professional called a tax auditor, who can visit your company or, from a distance, request documents and data to check all taxes. Knowing this is particularly important if you are an Independent contractor taxes. As a result, there are gains in productivity, reduced task execution time and improved management of the business as a whole.

Why is tax auditing important?

According to the explanations discussed throughout this text, it has already been noted that tax auditing is not synonymous with financial expenditure, but rather the guarantee that the processes are within the law. Its benefits still involve:

Problem prevention

By conducting a detailed assessment of the payment of taxes, the tax audit acts preventively, especially if it is done periodically. Thus, it is possible to avoid fraud and failures that could possibly harm the company.

Fault correction

The tax auditor prepares a report with all the information of the evaluated documents and the processes that can be adopted to correct less complex problems. Then, it indicates exactly what were the failures and the actions that can be applied to your solutions.

Tax recovery

It is common for many managers to pay taxes in different regimes than they could adopt. In that case, he pays more tax than he should. With the auditor’s assessment, on the other hand, the tax recovery feature is used for the development of the company. It even results in more strategic and sustainable tax planning.

How to prepare the company to receive a tax audit?

In order to make the role of the tax auditor more relevant and efficient, it is valid to take some actions so that, on the day of the process, everything happens safely and smoothly.

Gather the necessary documents

Company documents must be organized; after all, they are an essential part of the auditor’s performance. To speed up the procedure, gather the necessary documents, placing them in an easily accessible place.

Calculate taxes the right way

Tax assessment books will also be analyzed. Therefore, the calculation of taxes needs to be done properly. Otherwise, the auditor will have to demand more documents, which may take more time for the process to be carried out.

Recover lost documents

If the company’s document management is not done properly, it is possible that some XML files corresponding to the invoices have not been stored. However, it is allowed to retrieve the XML manually or robotically.

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