The Right Person for the Job
If you have ever tried doing home improvement projects on your own, you probably ran into some situations where you knew you were in over your head. For instance, painting a wall is simple enough, but replacing a kitchen sink is an entirely different matter unless you are a licensed plumber. For the difficult or potentially disastrous tasks, it is always smarter to call in an expert.
The same idea goes for business owners who handle their own accounting system. While basic bookkeeping is easy enough for businesses to take care of on their own, tackling a CRA audit is another matter altogether. Here are a few quick tips to help you if you have been selected for a CRA audit.
1. Ask why your business has been chosen for an audit – The CRA can ask for an audit for many reasons. Whether your business has shown financial losses for several years or your company was randomly selected, you should know up front why you are being audited.
2. Meet all the deadlines – From the initial assessment letter to the gathering of the requested documentation, the government will set deadlines for every part of the audit. The more compliant you are in meeting these deadlines, the better the overall audit will go.
3. Be ready – The CRA states that ignorance of tax laws is not an excuse to have business practices that run counter to what the tax act allows. By keeping your records in order throughout the year, your business will be in better shape for an audit.
To understand your rights as a taxpayer, visit CRA’s informational website link at http://www.cra-arc.gc.ca/E/pub/tg/rc17/rc17-e.html. Overall, it is important to understand who can represent your business best in a CRA audit. For a successful outcome, seriously consider hiring a reputable accounting firm that fully understands corporate tax laws.