With business tax season well behind us, and most small business taxes concluded, many owners continue on as usual and don’t necessarily stop to consider taxes outside of the regular, necessary dealings. However, if you’ve been less than compliant, and are therefore fearful of an audit, or have already been contacted about an audit, things may just be a little less ‘business as usual’.
When you own your own business, as a director, the liability for any questionable tax behaviour falls on you. This means you could be on the hook for any and all unreported income or any issues with unremitted taxes. Whether you are dealing with an audit, or just want to keep things aboveboard, here are some tips to keep your small business taxes in line and the CRA happy:
- Stay up to date with all GST/HST and payroll submissions, as well as all regular tax filings. This goes without saying. Anything else is usually just asking for trouble.
- Keep detailed records. If you don’t already do this, make sure that you keep all business information, invoices, bills, receipts, etc., well organized. If an audit is required in the future, this will ensure things go far more smoothly. It also makes it easy to find and submit any documentation required.
- Keep all shareholder accounts accurate. Any withdrawals or deposits should be well documented and explainable. For example, an accurate calculation of what you withdrew and what you invested is essential. If you paid some of the corporate expenses, this is considered an investment, whereas if the company paid your expenses, this is considered a withdrawal.
- If you have been contacted about an audit, be honest with the auditor. If you have something to hide, chances are usually pretty good that the auditor will find it. That being said, answer the questions posed to you, but don’t offer up anything that isn’t required.
- If you have been reassessed, but have not contacted the CRA, be wary when you do so. Try to keep all business and personal tax information separate. You never want to give the CRA a reason or way to come after your personal assets.
- If you have been reassessed and have already made payment arrangements with the CRA, make sure that there is always enough money to pay and make larger payments whenever possible. The sooner you have the CRA off your back, the better.
When it comes to small business taxes, whether you rely on the services of an accountant or you do all of your accounting yourself, compliancy is crucial. However, if you are concerned that some of your accounts may not be in line with what was reported, or you miscalculated and know that more may be owed, our best advice is to contact a tax organization before contacting the CRA. The same can be said for when you’re first contacted about an audit.
Protect yourself. At Tax Solutions Canada, we have the knowledge and experience to make both the voluntary disclosure and the auditing process run smoothly. Get in touch today by calling 1-888-868-1400.