How to Prepare Your Small Business for an Audit

Preparing your small business for an audit doesn’t have to be stressful—but many business owners feel overwhelmed simply because they don’t know what to expect. Whether you’re facing your first audit or trying to improve your audit process, proper preparation makes a major difference in both accuracy and time. Auditors want to see clean financial statements, organized documentation, and clear support for the numbers in your books. When your records are structured, reconciled, and well-documented, the audit moves faster, costs less, and gives you greater confidence in your financial reporting. Strong audit preparation isn’t just about compliance—it’s a sign that your business has sound financial systems and reliable bookkeeping in place.

Here’s how to prepare:

1. Reconcile everything: Bank accounts, credit cards, loans, payroll, AR, and AP must tie out.
2. Organize supporting documents: Invoices, receipts, contracts, bank statements, loan agreements, leases, etc.
3. Review your financial statements: Make sure they are consistent, accurate, and aligned with your general ledger.
4. Clean your chart of accounts: Remove duplicates and ensure transactions are categorized correctly.
5. Prepare schedules: Fixed assets, depreciation, inventory, prepaid expenses, accruals, AR/AP aging, etc.