Facing an IRS audit can be stressful for any business, and dental practices are no exception. While audits can happen randomly, they often arise due to discrepancies in financial records, red flags in tax filings, or industry-specific deductions that require further verification. Proper preparation is key to ensuring your practice can navigate an audit smoothly.

At Gray Pilgrim & Associates in Chambersburg, PA, we specialize in tax and financial services tailored to healthcare professionals, including HR training for dental practices in Chambersburg PA. Here’s how you can prepare your dental practice for an IRS audit.

1. Maintain Accurate and Organized Records

The foundation of a successful audit defense is strong financial recordkeeping. The IRS will review financial statements, tax returns, payroll records, and other business documentation. Make sure to:

• Keep detailed financial records for at least three years, including income, expenses, and deductions.
• Store receipts for equipment purchases, supply costs, and any deductible expenses.
• Ensure payroll records comply with HR training for healthcare in Chambersburg PA to avoid any discrepancies.

2. Understand Common IRS Red Flags

Certain factors can increase the likelihood of an IRS audit for dental practices. These include:

• Large Deductions: If your expenses significantly exceed industry norms, the IRS may take a closer look.
• Employee Classification Issues: Misclassifying employees as independent contractors can trigger scrutiny.
• Cash Transactions: If your practice handles a high volume of cash payments, ensure all transactions are properly recorded.
• Frequent Late Filings or Amended Returns: Filing inconsistencies may prompt an audit.

A tax CPA for physicians in Chambersburg PA can help review your filings to ensure accuracy and compliance.

3. Review Payroll and HR Compliance

HR compliance is an essential part of financial management. If your practice has employees, ensure:

• Payroll taxes are accurately calculated and filed on time.
• Employee classifications align with IRS guidelines.
• HR policies follow best practices, such as those covered in HR training for dental practices in Chambersburg PA.

4. Work with a CPA Specializing in Dental Practices

A CPA who understands the dental industry can help you:

• Identify and document eligible deductions.
• Prepare financial reports that align with IRS standards.
• Represent your practice during an audit if needed.

Dental transition CPAs in Chambersburg PA offer specialized expertise for dental professionals navigating audits and financial planning.

5. Respond Promptly and Professionally

If your dental practice is selected for an audit:

• Do not ignore IRS notices—respond within the required timeframe.
• Provide only the requested documentation; avoid offering unnecessary details.
• Consult with a tax CPA for physicians in Chambersburg PA to ensure compliance and avoid penalties.

Prepare Your Practice with Expert Guidance

Navigating an IRS audit requires careful planning and professional support. At Gray Pilgrim & Associates, we provide expert financial services, including HR training for healthcare in Chambersburg PA, to help dental practices remain compliant and audit-ready.



Schedule a consultation today to safeguard your practice and ensure financial stability.