If you own a business, then you have dealt with sales/use tax. Whether it is when purchasing materials and supplies or when selling a product to a customer, sales tax is a part of any business and poses potential risks. Larger businesses have internal personnel who are tasked specifically with sales/use tax compliance, audits, and research. Smaller businesses, likely, do not have those same resources.
To help identify those risks and your business’ exposure, performing a strategic risk assessment with a mock audit may be the right choice for you. A mock audit is an internal assessment that will mirror the tenets of a formal audit. Although it is a business expense, it has the potential to help save your business money in the long run. A mock audit could potentially help identify any costly mistakes that are currently being made or have been made in the past. It can also help identify potential refunds for transactions that were taxed in error. By identifying areas that need improvement, you are not only preparing for an audit, but also ensuring that when the time comes and your business is audited, there won’t be any surprises.
Perhaps you have discovered an error and need to apply for a refund. One should keep in mind that refunds are one of the top reasons a company is selected for an audit. Therefore, prior to requesting your refund, you may want to perform a mock audit to help identify any potential risks. By doing so, the risk of an unexpected bill at the end of the sequential audit is significantly lower.
There are many activities that a business may engage in that will have sales tax implications, for example opening a new location, branching into a new sector, or requesting a sales tax refund. Performing a strategic risk assessment has the potential to add value and help your organization be more proactive. This provides the opportunity to identify any areas where improvements may be needed prior to engaging in new activities or requesting a refund.
Let us help your organization identify your strengths and make recommendations to help minimize your risk.