Your auditor will want to verify that you’re being honest about the employee and sub figures that you’re showing on your books.
They do this by comparing your books to what you report to the federal and state government on your tax records.
For verification of your payroll, the auditor can use your 941’s or W-3. If you don’t have employees, they’ll want to verify by looking at your last year’s tax return for the schedule C.
For verification of your amounts paid to subs, the auditor will want to see your 1099’s and your 1096 summary. For builders that don’t issue 1099’s to corporations and LLC’s, the auditor will need to supplement this with your vendor list.