Six Steps to Ease the Pain of an Audit

April 15 is long gone, but now is a good time to plan for next tax season. Avoiding an audit may be impossible, especially since the Internal Revenue Service has stepped up scrutiny of companies with assets of less than $250 million. But receiving an IRS letter should not spell the end of your business. Here are six steps experts say you should take to make the experience less painful.

Be a Bookie

Filing those receipts and keeping your records up to date will save you a major IRS-induced headache down the line. Programs like Intuit's QuickBooks and TurboTax can make the task easier and less time-consuming. Not only will they walk you through the process, they can cut checks and organize data for easy recall as well.

Ask for Help

Unless you majored in accounting in college, you should consult a tax expert. Your business model may be so simple that you don't need an accountant on staff, but it would be wise to occasionally talk to an expert to make sure you're up on the latest regulations. For example, to keep costs down, a client of Tom Ochsenschlager, CPA, hired freelance sales representatives to market their new sports clothing line. However, as the company grew, the sales reps had enough work representing only that brand that they stopped representing other clients.

As a result, Ochsenschlager, who is also vice president of taxation for The American Institute of Certified Public Accountants, advised his client to change the sales reps' status from independent contractors to employees. "If in your deal you tell them the hours they're working, provide them a location to work from, and they're working exclusively for you, they can probably be considered employees," he says.