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Tips and Updates

Do I need to be worried about being audited? How do I get ready?

Posted on 26 February, 2014 at 11:50

OK, OK, I won't make you wait a week for the answers to how to calmly survive an audit... :P


Do you need to be worried about being audited?

If your books are in order you probably have very little to worry about but :

  1. Ask why you are being audited. If you don’t understand what you are told ask your bookkeeper or accountant to clarify. You want to know what has triggered the audit so you can be prepared to explain what is happening with your business.
  2. Supervise the audit. In other words don’t just hand over your files or a backup of your accounting database. That way you can answer any questions that arise. You can do this yourself or hire your bookkeeper or accountant to do this for you.


What can you do to get ready?

Make sure your books are in order. When CRA sees organized files with good backup for all information they will not look as hard as if they are faced with a box full of receipts and no clear system.

Follow the additional tips below and you should sail through that audit when it comes.

  1. If you aren’t sure if an expense if legitimate ask your bookkeeper or accountant…and then listen to them.
  2. Make sure you are keeping all original receipts. Your credit card slip is not enough, you need the store or restaurant receipt if one is available.
  3. On meal and entertainment receipts write the name of the person you had the meal with, their business relationship to you and the purpose of the meeting. For example if you take a customer to lunch you would write on the restaurant slip: Jim Jones, ABC Co, customer, upcoming projects.
  4. If you use your vehicle for business as well as personal use, keep a mileage log. Everyone has trouble with this but CRA does not accept excuses. So use an app on your smart phone, a note book that you keep in your car or an odometer device.. I am going to try out an odometer device soon and I will let you know if I am happy with it. Sometimes convenience is worth paying a few bucks for.

 

 

Categories: Small Business, Audits

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