As companies expand, they become more complex and require more resources to manage.  Due to ever-changing tax codes and regulations, sales and use tax compliance can be particularly challenging, and identifying inaccuracies in this area can be difficult. By conducting a reverse audit, you can potentially spot reporting errors and may even reap some financial rewards if the errors are in your favor.

How Can A Reverse Audit Help You?

1. Identify Prospective Overpayments

A sales and use tax reverse audit is an excellent way to identify overpayments, which can occur due to incorrect classification of goods and services, incorrect tax rates, or failure to take advantage of available exemptions. By conducting a reverse audit, businesses can recover the money they are owed, significantly improving their financial position.

2. Mitigate Risk

Non-compliance with sales and use tax laws can result in significant fines, penalties, and damage to a company’s reputation. A sales and use tax reverse audit can help businesses identify areas of non-compliance and take steps to correct them before they become a problem. By proactively addressing these issues, companies can mitigate risks and protect their reputation.

3. Improve Processes

A sales and use tax reverse audit can also help businesses improve their processes by identifying areas where errors have occurred. By taking steps to prevent these errors from happening again, companies can improve efficiency, reduce costs, and increase profitability.

4. Increase Cash Flow

Conducting a sales and use tax reverse audit can increase a business’s cash flow by identifying prospective overpayments and recovering money owed. This increased cash flow can then be reinvested into the business, used to pay down debt, or returned to shareholders, significantly improving the business’s financial health.

Have a question? Contact Nicole Brown ,Thompson Tax.