We talked with two QFloors customers who recently went through IRS and state tax audits. (Everyone’s worst nightmare, right?) With the help of QFloors, it was as painless as realistically possible. They both expressed that QFloors was a significant factor in the success of their experience. Here are a few of their thoughts.
Heidi:
We’ve actually been audited twice. One was an IRS audit a few years ago. You’re always nervous when they come calling, but we just sailed right through it. The auditor was in my office for ½ a day; that’s it. We thought for sure it would be much longer. He just asked for specific documents that were easily obtainable from QFloors. By lunchtime he had closed the books. He said to me, “If everyone’s books were in the shape yours are in, my job would be SO MUCH easier. This is perfect; everything works out here. Thank you so much.” And then he was gone.
The state sales tax audit was much more rigorous. I think the states are in so much trouble financially, the auditors are tasked with looking under every rock and lifting every shell to find every last penny. The audit went on for months. They just kept trying to dig deeper to find anything they could. They would tell me we were finished, and then decide to come back and look a little bit more. I suspect they may have been feeling pressure from their supervisor, after investing so much of their time on our business, to find anything that might bring in some revenue.
My state is a use tax state, and the auditor was genuinely shocked to see that I was paying use tax correctly. She said it’s very rare to find anyone properly paying use tax and sales tax. She also couldn’t believe that our software system tracks our sundries… that every bucket of nails was accounted for. She said so many contractors are not paying use tax, and not handling things properly, it’s almost an automatic that there will be a problem.
They were looking very hard, combing through everything. But after beating that dead horse way too long, they finally said “Wow. You’re actually okay.” I told them, “I spent a lot of money for a very good system, and that’s what it does. When you have a good system, it takes care of things.”
How does QFloors help you in an audit?
Well for one thing, it’s so easy to generate reports. The auditors had selected several reports and several invoices they wanted me to print for them, and I could quickly do that. In addition, there was no question about what is over at the warehouse. Our inventory control is top notch, thanks to QFloors. The auditor could see things were clearly tagged, with the product numbers visible on them.
What advice would you give someone about facing an audit?
Follow QFloors’ recommendations. If you’re doing the checks and balances that QFloors tells you to do, they can audit you until the cows come home, and you are still not going to have any problems. With QFloors’ system of doing things, you are protected. You will have a leg to stand on when the auditors come.
Of course, you have to use QFloors the correct way, or that won’t apply. It’s kind of like someone having high blood pressure and not taking their meds, and then wondering why they had a stroke.
Rick:
I’ve gone through 2 audits with QFloors. One was 10-15 years ago. Then we just recently had one.
With the first one, we ended up owing nothing. They spent a lot of time digging, and only found the most minor of issues. I think there were a few payables we’d brought in as tax exempt, and ended up using in our showroom, so they felt that should have been taxed. But that was the only thing they could find wrong, after a lot of digging. It went very well.
During the most recent audit, the auditor finished way before she thought she would. She thought it would take much longer. The auditor had planned on full week with 2-3 people doing the audit. Instead, she did it alone in 3 days. She told us it was a lot easier for her to do the audit (than with other companies) because everything was where it should have been and easily accessible, within QFloors. She could look through records a lot quicker than she would have with a different system. She seemed to find the system easy to navigate within. The information was there, easily accessed. She didn’t have to go through a lot of paperwork, sales invoices, etc. We were audited for a three-year period, but she did it very quickly.
We ended up coming out okay, although we were hit on a few things that were simply due to human error. QFloors was doing everything correct. The tax report QFloors produces at the end of each month can catch a lot of those types of things. You just need to stay up on it.
QFloors helps a lot in audits, because in it, everything is cut and dry. With QFloors, you never have situations where you don’t know whether you paid it or not, or what happened to it. The information is there, in black and white. As long as we do things right operationally, and use the system as it is supposed to be used, QFloors does a really good job of keeping things accurate. QFloors gives us good information and keeps us on track.
We’re in a use tax state, but we didn’t have any problems with use tax or sales tax in the audit. I really wasn’t that stressed about the audit. QFloors relieves a lot of that worry, because it automatically takes care of things for you.
