There’s no getting around it - the experience of having the IRS forensically root through your company records can be a stressful experience. No matter how scrupulous your business has been, there’s always the risk of something unpleasant being uncovered.
But the IRS auditing process is something that will only happen if tax officials have reasonable grounds to suspect the legitimacy of the submissions relating to your company. They do this with the help of a sophisticated data analysis system.
When it finds something that looks to be out of the norm, an IRS agent is alerted and will decide whether an audit is required to investigate further. One particular area that raises suspicion and may trigger an IRS audit is the reimbursement of expense reports.
Take a look at the three ways you can protect your business and minimize the risk of being put under the magnifying glass with the help of webexpenses:
Have a structured and well managed Accountable Plan in place
The most efficient way to handle the reimbursement of expense reports is with an accountable plan. This is when you meet all the IRS requirements to record exact details of each expense report, along with supporting documentation such as receipts or bills.
Webexpenses provides a seamlessly-organized and hassle-free way to collect, manage and accurately report this information. With digital receipts, customizable reports and tracking of all costs a system like webexpenses provides you with the proof to show IRS that all the requirements of an accountable plan have been met.
Reduce math mistakes with a digital system
Any kind of errors or math mix-ups are likely to raise IRS suspicion levels - no matter how innocent mistakes are. It’s a risk that increases whenever a business relies on paper-based ways of managing expense reports.
Webexpenses removes the need to rely on manual processing with the software automatically handling the bulk of the number crunching. One of the most common cause of IRS alerts are when human errors are made during data entry.
Ensuring Legitimate Expense reports
One of the requirements of an accountable plan is that expense reports are ‘ordinary’ - in other words, common and accepted in your business sector. Webexpenses provides a powerful tool for rooting out those expense reports that aren’t legitimate.
One of the ways it can do this is by providing users with on-screen policy warnings and reminders whenever they make an expense claim. Systems can also automatically alert finance teams whenever an expense report falls outside set limits.
Keep Track of Exact Mileage
The complexities of mileage claims make it a particularly hazardous area when it comes to IRS audits. But you can shield your company against any risks by using a digital expense management system to track the route and automatically calculate exact mileage.
This is done via a smartphone app that integrates with Bing maps to record with meter accuracy the distances between start and end of journey zip codes. This removes the fuzziness that’s created when distances are reliant on employee guesstimates.
So, while switching to a digital system won’t make the experience of an IRS audit any less worrisome, i can help lessen the chances that it’s something you’ll ever have to face.
And if it does happen - you’ll have all the data required to minimize the risks of auditors finding something nasty.
Webexpenses provides a better way for businesses to manage and monitor employee expense reports. Find out how it can help save your company time and money here.