The term “tax audit” is enough to make many entrepreneurs break out a cold sweat, and rightfully so. It can be a lengthy, demanding, and costly process. However, there are several fundamental principles that, when implemented, can significantly improve your starting position at the beginning of a tax audit. Below, we have prepared an overview of three basic tips that can make your prospects of success in a tax audit in Slovakia much more positive.

1. Trust, but verify

Although verifying business partners in this way during daily activities may seem laborious and time-consuming, by setting up internal processes correctly, you can save much more trouble and potential problems in the long run than the current time investment in verification represents. Prioritize protecting your business and try to avoid suspicious entities that could involve you in fraudulent schemes without your knowledge.

2. Fortune favours the prepared

Literally. When you receive the dreaded notice of a tax audit, the audited entity usually doesn’t have much time and must act promptly. The notification of a tax audit must include the start date of the audit, and if this date doesn’t suit you, you need to agree on a different date with the tax administrator within 8 days. However, the tax audit must start no later than 40 days after the notification is delivered.

At the same time, the tax administrator specifies in the notification which documents and records they require from the audited entity. Usually, even in simpler audits, these lists are extensive, and many transactions require supporting documents, such as contracts, orders, payment confirmations, etc. If you don’t have these documents prepared and organized on an ongoing basis and need to gather them within a relatively short period and for a period spanning several years while your business continues to operate normally, it can be very challenging. For this reason, do not underestimate the ongoing preparation and archiving of documents so that you always have them readily available.

3. Communication is key

You can have a good relationship with the tax administrator, and like in any relationship, communication is the key. Set up electronic mailboxes, pick up your mail, respond to requests in writing, by phone, or via email. In a tax audit, it is particularly important not to be passive but to actively inquire about the steps the tax administrator is taking and the direction of their considerations after you have submitted documents. Based on this, you can effectively defend yourself and present documents and evidence that will help you prove your claims. At the same time, you won’t waste time preparing documents that will be irrelevant to the tax administrator. If you are apprehensive about communicating with the tax administrator, engage a tax advisor to help you communicate effectively with them.

As you may have deduced from these tips, a significant part of success in a tax audit is achieved long before the tax administrator sends you a notice of its commencement. If you are not prepared, after the start of the tax audit, you are left scrambling to hastily gather evidence, exposing yourself to the risk of unnecessary tax adjustments.

If you are interested in setting up control processes tailored to your company, so that a possible future tax audit does not catch you off guard, we would be glad to offer you our consulting services. Our experience in the field of tax audits will help you identify and reveal weak spots in your processes, and our specific measures will help you reduce the risk of negative findings in the tax audit process. If you find this interesting, do not hesitate to contact us at .

Accounting is one of the key aspects for the smooth operation of your business, regardless of the industry you are in or the size of your business. Unfortunately, accounting errors are among the most common ones made by Romanian entrepreneurs, especially in the case of those operating businesses with revenues exceeding 1 million euros.

The most frequent accounting errors and their impact on your business

To raise awareness about the risks posed by accounting slip-ups, here are the most frequent errors and how you can avoid them.

Underestimating the importance of accurate and real-time updated financial records, as well as not involving your accountant and your lawyer in strategic and operational decision-making, are among the most common entrepreneurial errors. Neglecting the periodic reconciliation of bank statements, receivables, and payment obligations follows next. All of these are essential tools for proving that accounting records are in line with reality and for accurately estimating cash flow.

Another common mistake is the incorrect interpretation or lack of knowledge of relevant tax legislation, which can lead to errors in calculating and properly declaring taxes and fees.

All these mistakes or “omissions” lead to business destabilization and hinder business development. Firstly, they lead to making inaccurate decisions; incorrect financial information can lead to incorrect strategic and operational decisions, with a direct impact on performance and profitability levels.

In the end, there will be financial losses. Non-compliance with tax and accounting regulations can attract significant sanctions and penalties, which will have a negative impact on cash flow and profit.

Another immediate effect of accounting mistakes is the loss of credibility and tarnishing of reputation among investors and business partners. The absence of accurate and transparent accounting may deter them from getting involved in your business, thereby limiting growth opportunities and collaboration.

Legal and fiscal risks posed by the accounting errors

However, let’s return to the legal and fiscal risks posed by these accounting errors. In addition to substantial penalties and sanctions from the tax authorities, accounting errors can lead to costly legal disputes and lawsuits, with a series of negative consequences for the reputation and resources of the business, as well as for entrepreneurs personally.

Here are the main tax rules and regulations you need to comply with as an entrepreneur, and the resources you can access to stay informed continuously:

To stay updated with the latest legislative changes and tax regulations, you can follow the official websites of relevant institutions such as the Ministry of Public Finance and the National Agency for Fiscal Administration, as well as the websites of consulting companies.

Tools and resources for an efficient accounting

Ensure you have robust and up-to-date accounting. You’ll find that it helps you make informed decisions when it comes to strategic moves, leading to increased business efficiency and profitability with minimal risks.

You’ll experience a significant benefit in your relationship with investors and business partners. Accurate and transparent accounting boosts trust and opens doors to additional funding and successful collaborations.

Efficient accounting entails documenting and identifying optimal tools and resources, such as a fast invoicing software that aids in providing swift responses to clients and seamless integration into the market. Furthermore, a digital information transfer platform accelerates communication within the company and enhances production workflows. You can also opt for specialized accounting software; it requires a higher investment, but powerful accounting software tailored to your needs and business volume simplifies the recording and efficient management of financial transactions. Additionally, it generates financial reports that help you monitor and manage all financial aspects of the business, including transactions, inventory, and payroll.

The advantages of outsourcing the accounting and the advisory services

Another solution, which comes with long-term cost savings as well as saving time and personnel resources for recruitment, is outsourcing accounting services to specialized firms that can provide expertise and professional support in managing accounting and tax obligations. 

Whichever option you choose, it’s important to understand the role of accounting in the smooth operation of the business and undertake the necessary steps to organize your accounting efficiently:

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