I use Quickbooks. How would an IRS audit go?

Question

What do they look at?

What do they compare?

What do I need to produce?

Answer 1

I am using Quickbooks also.  I print a monthly profit loss report for records as well as monthly invoices (at the end of the month AFTER billing) because they show paid when they have been paid so they work as an invoice and a payment.  I also print my pay off using excel every month, just make sure you enable microns.  There are tutorials about this stuff with some quickbooks software.  They tell you what you will need for monthly reports and that will give you an idea of what you will need.  You can also talk to your accountant.  Chances are he will know what you will need as well.

http://accountingsolutionsltd.com/accoun...

This website gives some helpful info on what an audit will be like.

Answer 2

They will most likely be looking at a particular area.  They'll tell you what area they are looking at, and what they want to see, probably receipts.

Answer 3

Any computer based accounting system will help you put the information into a format that is organized and easy to follow.  However the IRS will look for data to back up those entries.  What they will look for is dependent on the nature of your return.  How you support the income reported is normally first on the list.  If it is all from W-2s, 1099s and and other forms reported directly to the IRS that issues goes away most of the time.  Next comes the deductions or credits you may have taken.  Be prepared to support each and every issue with documents that show how you arrived at the deduction.  Simply printing out you Quickbooks report will not do you much good.  All that really proves is that you have learned how to use Quickbooks.  Not that having learned Quickbooks is a small task.

Answer 4

At the very least, you need to show the receipts/invoices that you used to enter the data into Quickbooks with.