Financial Record Required for a Tax Audit
The specific financial record required for a tax audit depend on the business sector. Nevertheless, several typical documents encompass:
1. Profit and loss statement (P&L):
This statement summarizes the revenues and expenses of a business over a specific period of time. We use it to calculate the net profit or loss for the period.
2. Balance sheet:
This statement shows the assets, liabilities, and equity of a business at a specific point in time. It serves as a tool for evaluating the financial well-being of the company.
3. Cash flow statement:
This statement shows the inflows and outflows of cash from a business over a specific period of time. We use it to track the liquidity of the business.
4. Tax return:
A business files this document with the government to report its income and taxes paid.
5. Aging reports:
These reports show the age of accounts receivable and accounts payable. We use them to track the collectability of receivables and the payment terms of payables.
6. Inventory records:
These records show the quantity and value of inventory held by a business. We use them to track the cost of goods sold and the profitability of the business.
7. Payroll records:
These records show the wages and salaries paid to employees, as well as the taxes withheld from their paychecks. They are used to comply with tax laws and regulations.
8. Bank statements:
These statements show the inflows and outflows of money from a business’s bank accounts. They are used to reconcile the bank accounts and to track cash flow.
9. Vendor invoices:
These invoices show the goods and services purchased by a business from vendors. They are used to track expenses and to claim deductions on tax returns.
10. Customer receipts:
These receipts show the goods and services sold by a business to customers. They are used to track revenues and to claim sales tax on tax returns.
To visit: https://www.mca.gov.in/
For further details access our website: https://vibrantfinserv.com