First and foremost organize all your business records, like income statements, receipts, checks and bank statements. Try to confine the audit to one issue such as insurance expenses on the Schedule C where all the income and expenses are reported.
In order to further protect yourself, reconcile all of your bank statements to your income tax return. That way if you are asked about business income you will be ready.
Another key point is to answer only the questions you are asked. Just plain do not volunteer information. For example, if the IRS asks about a hobby losses do not say it is not a hobby; it is a business.
The audit could be at the offices of the IRS or the audit could take place in the field. If it is a field audit, the IRS agent will come to your office. A field audit is usually more comprehensive.
With a field audit give the IRS agent space away from your main business. He or she can be given a desk and some office supplies. In other words, make him or her comfortable, but not in an active area of your business.
One last observation, if your case is referred to a special agent, hire a lawyer or CPA. Special agents are involved in criminal investigations for the IRS.
This is not legal advice from the legal beagle. Please consult your lawyer.