For some time, we’ve talked about state sales tax audits on the SpeedTax blog, primarily how these audits are being increased as a way for states to make up for lost sales tax revenues. It’s good, however, to also sound a wake-up call regarding how businesses handle the more popular “audit” of personal and company tax returns.

Lane Gorman Trubitt, LLP, an accounting firm in Dallas, Texas, recently published its own guide on how small businesses can prepare for an audit, including steps prior to the audit and what businesses can expect during the audit itself.

One piece of advice from the guide rings truer than ever: “The important thing to remember is that you maintain adequate records - that way you are able to produce them when asked by the auditor. If you are unable to do so, the auditor is legally permitted to estimate your income and expenses as well as impose a separate penalty for failure to keep records.”