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small business audit

What Is a Small Business Audit?

Do you shudder when you hear the “A” word?


If you’re a small business owner, try to ignore the chill that just climbed its way up your spine. There are IRS audits, which you don’t want … but a business audit, done by a professional auditor, is more like regularly scheduled maintenance on your car.

Here, we’ll educate you on what to expect from a small business audit, and why you might want to look into having one performed on your own company.

What Is an Audit?

An audit, put simply, is an accuracy and compliance check on your business’s financials – your taxes, accounting records, etc. Think of it as “quality control.” In fact, that’s essentially what it is when the IRS is conducting it. The problem is, they’re checking your books because they have reason to believe they’re inaccurate.

A routine small business audit, on the other hand, makes sure all your records are accurate so there’s no reason for the IRS to think otherwise.

The Benefits

Staying on the IRS’s good side is one of the reasons it makes sense to get an audit done.

Also, a close look at your books every year can help uncover inefficiencies or even fraud that you otherwise might have missed by being less attentive to your financial records. And prospective venture capitalists and other investors will feel more confident in plunking down their funds if they know they can believe in the numbers you’re presenting them.

In some cases, business audits aren’t elective – certain types of businesses must be audited every single year to receive certain certifications that allow them to stay in business.

How They’re Conducted

Audits themselves can be done internally or externally. Internal audits are done by anywhere from one to a team of people within your company, depending on your resources. They typically are for your own business purposes, whether it’s giving yourself peace of mind or keeping investors in the know. Meanwhile, companies that have to undergo an audit every year look to independent, third-party auditors that have no connection to the business.

No matter what kind of audit you undergo – internal, external or even an IRS audit – you want to be prepared. There’s no complex method or insider secret for doing this. Just make sure your financial records check off these three boxes:

  • They’re through.
  • They’re organized.
  • They’re easy for an auditor to access.

An auditor can then begin the process of scouring your information to see whether all of your financial statements and other materials are a fair and true representation of your actual, or if they contain any errors that need to be corrected.

If your company needs a third-party auditor, or if you simply want to have an external audit done to ensure the job is done without any potential bias, talk to the accounting experts at McManamon & Co. We have been offering auditing services for more than four decades, so we can not only ensure a thorough assessment and evaluation, but also constant communication throughout the process to make sure your entire team is well-informed.

“Close” isn’t good enough for corporate financials. Make sure your records are being handled with precision. Call us at 440.892.9088 or contact us online today.

Tags:  , , | Posted in accounting, McManamon & Co., small business