Avoid getting audited by being compliant and paying your taxes diligently. Many tax and audit services in the Philippines can attest that getting audited by the BIR is a headache. So don’t wait for that kind of investigation to happen before you do anything.
Instead, stay proactive with your own bookkeeping, accounting, and auditing systems. Ensure that the completion, filing, and payment of your taxes are done before the deadline. To avoid mishaps that might lead to tax deficiency audits, be responsible and wise in computing your payables and taxes due. Check out these tips to help you avoid a BIR audit:
1. Report Your Full Income
When you compute the total income you earned for the year, make sure to include every single detail. Include your rentals, side hustles, and other sources of income. According to tax services in Manila, not completely reporting your total income might save you a little money upfront. However, later on, this step will surely cost you more money. Moreover, it will stress you out more because of penalties and surcharges.
2. Make Sure Your Computations are Accurate
Do your best in avoiding computation mistakes. Be very vigilant in tabulating your report on sales and deductibles. Inaccurate computations will lead to your numbers not tallying. When that happens, you will have a lot of trouble. Check your tax returns multiple times before you file them. Unfortunately, even honest mistakes and errors in computation subject you to penalties.
3. Report Your Correct Expenses and Deductibles
Do not overclaim your expenses and deductions. This is a red flag for the BIR so avoid it at all costs. One of the most common sore spots for auditors is erroneous data entry; however if you are just honest about your financial records, you wouldn’t have to worry about anything.
4. Submit Evidence with Your Tax Returns
Make sure that every time you file your tax returns, always include and submit sufficient evidence. Auditors are skilled in spotting accidental or intentional discrepancies so when you submit sufficient evidence to back up your claims, you don’t need to worry about being audited.
5. Hire A Professional
Getting help and hiring a professional to help with creating your tax plan would benefit you greatly. Working with a CPA or certified public accountant will help you make sure you have true and accurate tax returns. Your chosen tax and accounting services in the Philippines may also review and check your books of accounts and financial statements to make sure that you are free from tax deficiencies.
How to Have a Smooth Audit Process
If you are confident and honest with your financial records, getting a BIR audit letter should not terrify you. The whole process of auditing is stressful since you have to dig up your records to prove that you are not evading your taxes.
1. Go Through and Read the Letter of Authority with Your Accountant
Read the love letter or Letter of Authority and find out what the BIR needs from you. Determine the issues they mentioned. Act on it as soon as possible. Delaying your action will only make you look suspicious and make you accrue more penalties.
2. Organize Your Files
Organize your accounting records before the Revenue Officer checks them. Prepare your records from the past years. If you have a good bookkeeping and documentation system, you should be able to provide copies of your receipts, bank statements, invoices, ledgers, and many more if the officer will ask for them.
3. Be Honest with Your Answers
The Revenue Officer will be asking a lot of questions so prepare yourself and be honest with your answers. Do not make excuses or fabricate details and do not add any other information. Just ensure that you are focusing on the information requested regarding the issue and you will finish in no time.
4. Do Not Feel Defensive and Be Confident
There is no need to feel defensive and antagonize the Revenue Officer if you are honest. Be confident when you and your accountant face BIR. You do not need to be terrified if you know you did nothing intentionally wrong. Be confident since you have nothing to hide.
5. Comply with Their Demands
Be compliant with their demands and if you fail to give them sufficient evidence to back up your claims, you have to prepare yourself to pay the penalties, deficiencies, and surcharges.
Getting audited will give you a headache. To avoid it, make sure to comply and file your taxes due on time. Check your financial records regularly to make sure they are in good shape. In case you get audited, you have nothing to worry about since you have organized your records and made sure that they are all accurate. Seek help from our firm to ensure you’re compliant with your documents and taxes. We provide bookkeeping, accounting, tax, and auditing services in Pasig.