How to Prevent Tax Audits - Few Ideas!

Tax Audits are on rise as CRA is looking to increase tax collections and reduce deficits.

A tax audit is when the CRA reviews tax returns to determine if income, expenses, and credits are reported accurately. Avoiding a tax audit is possible by being completely honest about deductions, but audits can still occur even without any red flags on a tax return.

1. Complete & adequate books of records (as per chartered accountants Mississauga and Etobicoke.) 

Canadian tax laws generally require taxpayers to keep complete books and records for at least six years from the end of the year to which they relate. Keep all receipts and proof of payment for the various expenses that you have claimed on your tax return. Failure to provide corroborating information to the CRA may leads to comprehensive tax audit.

2. File taxes on time (as per chartered accountants Mississauga and Etobicoke)

Make sure tax filings are completed on time. Not only does this prevent incurring penalties and interest charges on late filings, it also shows that you adhere to rules and could reduce your chances of being audited.

3. Review the tax return for Consistency (as per chartered accountants Mississauga and Etobicoke) 

Try to keep the proportion of expenses to revenues consistent from year to year and CRA is unlikely to investigate. However, if there are wild fluctuations from one year to the next, the CRA may be inclined to follow-up with a request for information or an audit.

4. Review taxes for errors (as per chartered accountants Mississauga and Etobicoke)

The CRA is more likely to flag returns of taxpayers for follow-up or audit if they have found errors on a taxpayer's return in the past. You should ensure accuracy and completeness of returns prior to filing. However, if you find a mistake after filing, be proactive and file an adjustment rather than let the CRA find it for you. Always try to report your income from every source properly.

5. Investment and donation Schemes (as per chartered accountants Mississauga and Etobicoke) 

Investment and donation schemes are targeted and audited by the CRA. Tax payers participating in these schemes have a higher chance of being audited. Such claims are red flags on tax filings. If something seems too good to be true, it likely is.

If you are self employed or running a business, chances are that your taxes are more complicated and it's always a good idea to get help from a professional tax advisor.

Top 5 QuickBooks Questions

1. Ever wonder why after very nicely downloading transactions from your bank account or Credit Card Company the balances never seem right? Of course there are uncleared items in your register; but sometimes the download gets confused about where it left off the last time you downloaded. This can cause duplicate transactions. Review your registers and see if you have duplicates (hint: check the register around the last download date) and just delete them.

2. Why does my sales tax have such a large balance even though I pay it right on time? You probably did not use the "manage sales tax" button on the home page; then select pay sales tax (Hint: make sure you edit the dates for the period end you are paying).

3. Can I add my logo or customize my invoices/estimates/sales orders? Yes you can. In QuickBooks 2012 and prior open an invoice and in the upper right hand corner select the "customize" button. In 2013 go to the menu bar and select formatting; from here you can copy a template, edit the current one or import already created templates. You can have multiple templates for various uses. To add your logo, in the customize window, select the basic customization button at the bottom of the screen. Not enough customization? Go to Layout Designer; here you can add text boxes, move things around, etc. Just remember that whenever you use this template every invoice/estimate/sales order will have the customizations.

4. What is the undeposited funds account? QuickBooks is designed to mirror real life. You probably don't deposit checks one at a time. You probably go to the bank with multiple checks. When your bank statement comes you don't see the detail of the deposit, you only see the deposit total. It can be difficult to reconcile if you have individual checks in your register. What to do? When you receive in payments from customers in the receive payment window the money should be going to undeposited funds. When you finally do get to the bank go to "make deposits" and the list of undeposited funds will come up; from here select the checks you are depositing, select OK and there is your total deposit.

5. How do I customize the homepage? Select edit/preferences/desktop view/company preferences; from here you can select functionality to turn on or off. Hint: you can also customize the icon bar by right clicking the bar and selecting "customizing the icon bar" Here you can add/remove/move around, etc.

Use an Accounting Service And Take Your Small Business To The Next Level

Many new entrepreneurs think that they have what it takes to run a business. They fail to think critically about everything that business management entails. They only come to realize later that their companies cannot do without accounting services. An accounting department allows an entrepreneur to know how money is flowing in and out of the company.

It detects money embezzlement loopholes and informs the business owner about it. Since the essence of launching a personal organization is to make money; you want an accountant who knows their job clearly. Today more and more organizations are outsourcing their clerical tasks. This means that they are seeking independent accountancy firms that can offer high quality and inexpensive accounting services every day.

By so doing, they are avoiding the hassle of planning and implementing conventional recruitment processes. The most exciting thing about use of independent accounting services is the assurance that you can take a legal measure against a service provider. If such an accountancy organization messes with your data privacy, for instance, you have the power to sue it. Furthermore, being able to hire a large team of intelligent accountants is a bonus for your company.

First, any large task will always be processed quickly and accurately. Secondly, a team may be able to discuss and solve a technical problem faster than one accountant. There is no way that you will regret buying great accounting services. If you are like many other small business owners, keeping track of every transaction and compiling ledger accounts later on is detestable. It is not something you want to keep doing every day.

Recruiting one or more accountants to give you their accounting services will demand use of money and time. This is because you need to advertise a job opening in the local newspaper and employ a qualified HR professional to create the job description. Then you will wait for interested applicants to apply so as to pick the candidates you want. After this you will call or email the candidates you are interested in and take them through an interview process.

After picking the candidate who is more deserving of the advertised job, they will require an orientation procedure to understand how your company works. In short, a normal recruitment exercise can take several weeks while a search for the best accounting services can take a few minutes on the internet. After employing, your managerial duties will become harder since there will be one more person to supervise. Why should you endure this difficulty when you can simply outsource your accounting work? Outsourcing is the newest strategy for reducing office work, managerial duties and working capital.

According to people who normally work with independent firms, one can decrease business running costs by fifty percent. You can even survive alone in the office while assigning difficult clerical work to real professionals. When buying accounting services consider the financial position of your business. It is good to farm out just a few tasks first to see how your first self-employed accountants will perform. You may also read existing internet reviews and testimonials prior to hiring anyone.