When the EDD gets any information that a business has not been correctly paying employment taxes, they would conduct an audit to determine the facts. The business owner is not only responsible to pay wages to his employees and contractor but also file for their taxes. The minimum wage payment and overtime payment should be followed as per the federal guidelines. Sometimes, EDD audit can also be required if the employees are misclassified as an independent worker. Therefore, it is important to be cautious of the same.
Running a business smoothly and successfully requires a lot of efforts and hard work. There are a lot of things to take care of to ensure there are no challenges and hindrances in business operations. As a business owner, one should also discharge his duties as a citizen besides doing the part of a businessman. Paying taxes on time is a legal duty of every citizen of the country. Apart from that, as an employer, it is the responsibility of business owners to avoid employment tax frauds. The Employment Development Department is responsible to audit businesses to ensure that they are not doing any fraud. You should be aware of the EDD audit process to know how it works.
When your business requires an audit by the EDD, you should not be worried at all. Knowing the EDD audit process will help you to understand how it works.
When the auditor arrives at your business place, they will conduct a preliminary interview and discuss with you the reasons for the audit. They will also guide you about the whole EDD audit process so that you can expect what is coming forward. If you have any questions, you can ask them.
Their next step would be to examine the classification of employees, the work they did and the wages you paid them. When the EDD audit work is completed, the auditor will share his observations to you, that is called Proposed Notice of Assessment (PNA). If you do not agree with the PNA, you can challenge anytime. If they say that you have underpaid the taxes, you would have to pay fines. The EDD audit process can be difficult for some people. If your business is going to have an EDD audit, you should seek professional help. The experienced lawyers will help you with the whole process and help you avoid paying hefty fines. You should contact Dallo Law Group for further details on how they can help you with EDD audit.