When California’s Employment Development Department (EDD) audits your business, it can be a daunting and complex experience. Fortunately, there are ways to make the process less stressful and minimize liability. Below are five tips for employers preparing for an EDD audit.
Cooperate With the EDD During the Audit
First and foremost, prioritize fully cooperating with the EDD throughout the entire audit process. This means providing all requested documents and information and answering any questions the auditor may have.
Remember—the EDD is performing this audit to ensure adherence to the state’s employment and tax regulations. By being cooperative, your cooperation will demonstrate your commitment to upholding these standards, likely resulting in a more favorable outcome.
Never Underestimate Your Liabilities
As a business owner, you are ultimately responsible for errors or discrepancies within your company’s financial records. To protect yourself from potential liability, be proactive in understanding your true financial picture. This includes familiarizing yourself with California’s employment and tax laws, reviewing your financial practices, and ensuring full compliance. By being diligent and proactive, you can better defend your business against unexpected liability during the audit.
Take Steps To Prevent Other Penalties
When the EDD finishes the audit, it may find that you owe an amount. You can appeal these findings. However, if you decide to pay it or if the appeal does not rule in your favor, you must pay what you owe within 30 days. Otherwise, you may incur fines that add to your debt and financial woes. These can increase over time, depending on how late your payment is.
Know When To Turn in Your Petition
If you disagree with the EDD’s audit findings, you have 30 days from receiving your assessment to file a petition for an appeal. Although a late filing can prevent you from forming a settlement, you can get an extension if the administrative law judge sees ample reason for it.
Seek the Help of an Attorney
Obtaining legal counsel to assist you is another good tip for employers preparing for an EDD audit. An attorney familiar with California’s employment and tax regulations can help review your documents, advise on compliance matters, and represent you during an audit or an appeal. Their expertise will give you peace of mind and support, allowing you to focus on effectively running your business.
Following these five tips can help you better navigate an EDD audit. Pershing Square Law Firm employs experienced EDD lawyers in California who can assist you throughout the process. Our firm has a strong record of lowering the assessments of all our customers and settling repayment terms.