Set Best Practices For Your Business
Audit proofing your business is a sign of good corporate governance. Essential to the concept of audit proofing your business is your manner of handling record keeping for your business and your knowledge of the laws that affect you on a day-to-day basis.
Tax audits remain relatively rare, but should you face one, be prepared for questions. Tax authorities tend to deny everything and then make you prove that your deductions are valid. Here are some suggestions.
How can you prepare?
KEEP A CLEAR AUDIT TRAIL
A clear audit trail shows the path of money in all transactions for your business. The first step in creating an audit trail is to ensure there can’t be any confusion as to which money belongs to the business and which money belongs to you personally. Make this easier by setting up a separate business bank account and getting a separate credit card for your business. Then you need to be religious about paying your business expenses from the right account or on the right card and putting your business income into the right account so you always have a trail that proves which money belongs where.
MAKE SURE YOUR RECORD KEEPING IS OUTSTANDING
Using a professional online accounting software solution should be your first order of business. Accounting software allows you to monitor your cash flow and your trading performance. It will also be of great help when you calculate your GST and HST payables.
In case you are subjected to a Business Records Audit by the tax office, the first thing they will ask is “How do you handle your income and expenses?” Utilising professionals to maintain your records and file official documents, such as Tax Returns and Payroll Tax returns, will be of great benefit to you.
AVOID REVENUE DISCREPANCIES
Your revenue is a fixed number, not a variable one, so make sure it’s the same no matter where you report it. The CRA compares the revenue you report on your tax return with the revenue declared on your GST/HST tax return, your spouse’s tax return, and tax return information submitted by employers, financial institutions, and other related parties. If those numbers don’t match, it’s audit time.
See a qualified tax advisor, accountant or bookkeeper to help guide you in making tax changes for the better.
Ready to take the next step?
Hamilton Business Accounting can help you organise your tax, accounting and bookkeeping affairs. We work with large companies, SMEs, family businesses and individuals. Call us today!
We are a team of experienced bookkeepers and accountants with multi-year experience. We are experienced in Sage 50, QuickBooks, Xero and Excel to keep your books and final reports for the year-end. Our collaboration with CPA accounting firms provides our clients seamless access to accounting advice for your business accounting needs.
Our services include
Journal Entries, Bank Reconciliations, Payroll, Payroll Source Remittance, HST Returns, Financial Statements
Cloud computing allows businesses to store all relevant expense invoices and receipts within your accounting transactions. These receipts and invoices are available to be shared with any agency with a simple click of a button greatly reducing Audit costs.