Prepare for possible CRA audits with the help of your outsourced tax department.
Ah, the CRA – the wizards behind the curtain of taxes, pulling financial rabbits out of hats and occasionally waving their audit wands. These folks hold the important responsibility of ensuring that we all adhere to the regulations concerning taxes and business finances.
All businesses must remain in the good graces of the CRA—keeping the CRA happy requires a bit of financial wizardry to avoid any unexpected tax tricks!
As highlighted in our previous blog post, a limited amount of resources and skill sets may make maintaining an in-house finance team feel impossible. When the CRA begins its annual magic show, having the proper tax team becomes crucial to prepare you for potential CRA audits!
Why Your Business Might Be Considered For A CRA Audit
The CRA selects files for audits through a strict risk assessment process. This evaluation considers various factors, including:
- Unusual changes in deductions
- Overstated expenses
- Overstated credits
- Underreported or unreported earnings
- GST/HST non-compliance
- Third-party tips
- Expenses not supported by receipts
- Unreported offshore income
- Unreported offshore assets
There are times when small businesses may get randomly selected for an audit without meeting any of the CRA’s audit criteria. However, making sure your bookkeeping records are in pristine condition is how to avoid a CRA audit.
How the CRA Audit Process Works
So, your business has been selected for an audit by the CRA. What happens next? Here’s what you should know about audits.
First, a CRA auditor will contact you to let you know they intend to conduct an audit on your business. This notice will detail the specifics the CRA requires, as well as the location of the audit.
Next, the CRA auditor will thoroughly review any of the relevant information you provided per their request. This might involve past tax returns, business documents, and even personal records. Although standard CRA audits often conclude in under 3 months, some can extend over several years depending on their complexities. The auditor may then request additional information based on what was previously sent in.
Finally, once the audit is complete, you’ll face one of two possible outcomes:
- The auditor finds that all of your records contain the correct information stated, so there’s nothing more to assess and the audit is closed.
- The auditor will find that your tax return needs to be reassessed again to determine whether:
- you paid too much and are eligible for a refund, or
- you didn’t pay enough and will need to pay additional taxes alongside interest and penalties.
Of course, if you believe your business doesn’t need a reassessment, you have the right to dispute the claim with the CRA.
Steer Clear of CRA Audits With An Outsourced Finance Department
The CRA holds a lot of power when it comes to accessing all your financial details.
With the stress of the CRA audit, business owners might accidentally share too much information, making things more complicated and prolonging the process as the CRA delves into the unnecessary details provided.
It’s better to let tax experts (like us!) who know the ins and outs of CRA audits handle it for you. We’ll directly talk to the CRA and make sure only the necessary information is shared.
With our expertise, we ensure you and your business are taking advantage of tax savings opportunities while confirming you’re prepared for a possible CRA audit. These bookkeeping services include:
- Recording of sales invoices
- Recording of expenses
- Bank reconciliations
- Payroll processing
- CRA accounts reconciliation
- HST/GST filings
- Financial statements
- Corporate and personal tax returns
As a business owner, managing numbers and tax deadlines might be the last thing you want to worry about. That’s where SBLR’s outsourced bookkeeping and accounting services step in. Entrusting your bookkeeping, accounting and tax needs to us means you can say goodbye to sleepless nights and concentrate on what you excel at – running your business! This not only frees up your time and resources but also acts as your secret weapon to steer clear of CRA troubles and penalties. Let SBLR deal with CRA while you focus on your business.
Learn more about how your business can benefit from outsourcing your financial services with the latest cloud technology in part 3 of our blog series. In the meantime, schedule a consultation to discuss your business’ tax planning needs with our team of experts: https://sblr.ca/request-consultation/