The Cloud & IRS Guide


What Exactly is Cloud Hosting?

Cloud hosting provides the host; the host provides users with virtual servers for extracting and storing data, which is then connected to a vast and complex network of physical web servers offered at the back end.

Usually, the clients can use the cloud hosting services as often as they want, depending on their usage and requirements. Cloud hosting is the ultimate solution for cost-effective data storage without using many physical storage disks. Furthermore, the client is not required to pay for the extra capacity and pays only for the storage being used by them. Download A Free Financial Toolkit

What is an IRS Audit?

An IRS Audit is a detailed review of an organization or person’s accounts and financial information. The audit checks that all information is reported correctly, all tax laws are being followed, and the company or individual is paying their taxes as required and, hence, verifying all the amounts paid as tax to be correct.

The Three Basic Types of IRS Audits

If you or your organization has been earning millions, there is a one-sixth chance that you might be selected for an IRS audit. If you are earning an average pay, your chances are even. An IRS audit is random and is a detailed analysis of your finances to ensure that all money is earned from lawful sources and that all taxes are paid according to the law.

Usually, an IRS audit is triggered if the IRS notices unlawful activity related to your revenues or earnings. It could also be performed because the IRS notices that the taxes required are not being paid. An example of such activity is a sudden massive drop in your revenues or earnings that might indicate that you are trying to hide money to avoid taxes. It is a very detailed auditing process in which details of your finances are combed through so that any discrepancies can be caught. The three basic types of IRS audits are explained below.

Correspondence Audits

These audits are the most straightforward audits of them all. Correspondence audits usually occur when you have a slight mistake in your tax returns, which could be a human error based on typing in the correct amount.

CorpNet. Start A New Business NowOffice Audits

An office audit is a bit more complicated and scary. During this audit, you are asked to go to an IRS office with all the correct paperwork that is required of you. This audit might be triggered if you have increased and high tax deductions – such as a medical expense.

Field Audits

A field audit, on the other hand, is similar to an office audit, but the IRS approaches you. In such cases, representatives from the IRS visit you at your home or workplace and request to look at specific paperwork and records of your business dealings.

If you are being audited, the IRS will notify you properly via a call or letter. The letter or call would further inform you of the required documents and paperwork that might help them assess your earning and tax-paying patterns.

What Documents are Usually Required by the IRS?

When selected for an audit, the IRS notifies and informs you about the documents they might need to conduct your audit. However, some of the documents may include:

  • All documents that are material in the administration of the Internal Revenue law
  • Records regarding revenues, taxes, earnings, expenses, and purchases for at least the three previous years
  • Complete employment records for the past four years, at leastComplete Controller. America’s Bookkeeping Experts

Documents required to meet IRS Standards in Cloud Hosting

Electronic times have made things faster and more accessible. Hence, you must create digital copies of all related paperwork and store them in your cloud hosting services. When facing an IRS audit, these documents are readily available and save both parties a lot of time and effort, making the complete audit process easier and quicker.

According to the IRS website, the documents stored electronically which are acceptable for the audit should be prepared as follows:

The electronic storage system must index, store, preserve, retrieve, and reproduce the electronically stored books and records in a legible format. All electronic storage systems must provide a complete and accurate record of your data that is accessible to the IRS. Electronic storage systems are also subject to the same controls and retention guidelines imposed on your original hard-copy books and records. 

In essence, all of these documents must be complete, accessible, and accurate while proving all the transactions and details required and asked by the IRS Audit.

Cubicle to Cloud virtual businessAbout Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. LastPass – Family or Org Password Vault