Tax audit of a sole proprietorship

Tax audits of individual entrepreneurs (IEs) are a standard practice used by tax authorities to ensure compliance with tax laws. In today's reality, most tax audits are conducted in connection with the closure or liquidation of a sole proprietorship.

For many sole proprietors, this can be a rather stressful period, but proper preparation and understanding of the process can help reduce your risks and ensure a successful outcome.

How to prepare for a tax audit?

• Organize your finances: As part of the audit, the tax authorities will require documentation of income, expenses, tax liabilities and other financial aspects of your business. It is important to have all this information organized and easily accessible.
• Check your bookkeeping: Make sure that your bookkeeping meets all the requirements of tax law. Check that your tax returns and other required documents are completed correctly.
• Gather the documents: Prepare all necessary documents such as contracts, invoices, bank statements, etc. This may also include documents supporting expenses and investments.
• Prepare for questions: Tax inspectors may ask you questions about your business activities, business operations, and finances in general. Be prepared for this by researching your activities and analyzing the financial position of your company.

What to expect during a tax audit?

• Review of documents: Tax inspectors will check your documents for compliance with the law, as well as the correctness and completeness of accounting and payment of taxes, fees and other mandatory payments.
• Submit explanations and objections: If deficiencies or errors are found, you may be asked to submit explanations or make appropriate corrections in the manner and in the manner prescribed by the Tax Code of Ukraine.

Based on the results of such an audit, the tax authorities send a tax audit report and tax notices based on it - decisions on the establishment of monetary (tax) liabilities to the sole proprietorship.

After reviewing the Act and the issued tax notices, you should pay attention to compliance with all provisions of the current legislation and, if necessary, apply the procedure of administrative and/or judicial appeal.

A tax audit can be an important milestone in the life of any sole proprietor, but proper preparation and cooperation with tax authorities and lawyers can help ensure a positive outcome. It is important to respond to any requests or demands of tax inspectors in a timely and correct manner and to comply with all tax legislation requirements.

By engaging Prikhodko & Partners Law Firm, you get a team of tax lawyers and auditors who understand all aspects of tax audits and are ready to provide you with full support for your business. Fill out the form on our website and our tax lawyer will contact you shortly.