Preparing a Will

5 Tips To Avoid A Small Business Tax Audit

As a small business owner, the thought of an audit from the Canada Revenue Agency (CRA) may leave you feeling quite anxious. The good news is that an audit isn’t the end of the world. With the help of an accountant, like Tony Tiani & Co Inc Prince George, your business can get through the audit without it leading to the demise of your business. Ideally, though, you will avoid the hassle and expense of an audit in the first place. Here are five ways to do just that: Double-Check Your Return Discrepancies in your arithmetic may be an honest mistake, but they can still trigger an audit. It’s worth the time to double-check your tax return before you file it. If your math isn’t quite adding up, you may want to have an eagle-eyed friend, family member, or employee perform their own audit before you file. Use Tax Software When you’re an employee of a business, filing your taxes on your own may make sense, but as a business owner taxes are simply too complicated. Eliminate the stress of completing your own tax return by hand and invest in decent tax software instead. This can help eliminate obvious errors and issues that may look suspicious to the CRA. Document All Business Expenses Claiming a large amount of business expenses can catch the eye of the CRA. If you do claim business expenses, they need to be legitimate (completely related to your business) and documented. You should have copies of all receipts and they should be organized and clearly labeled. Respond Promptly to Inquiries If you receive an inquiry letter from the CRA, do not panic. Oftentimes instead of going straight to an audit, the CRA will send you a letter asking for clarification about anything confusing in your tax return. To avoid this turning into a full audit, it’s prudent to reply promptly, professionally, and with all requested documentation. File on Time While filing late won’t guarantee an audit, it does bump up your chances in the same way that any irregularities do. Plus, you will probably be subject to late fees and penalties, which can damage your business financially. If you don’t have time to get to your taxes before the deadline, that is a great reason to hire an accountant. By following these tips, you can minimize your chances of being audited by the CRA. Just to be on […]

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3 Of The Most Common Bank Reconciliation Mistakes

If your bank reconciliation is off at the end of the month, you may be getting a little frustrated. Depending on the volume of transactions you do, it can be extremely difficult to find a single error. But it’s still important to track down any issues. Even a seemingly minor problem, such as being off a few cents, could actually signify a larger accounting problem. 1. Transposition Errors A transposition error is very simple. You might enter in a transaction as $12.34 when it was actually $12.43. You can identify a transposition error because your ending reconciliation will often be off by a number which includes the number “9” (because transposition numbers are flipped). These can be very difficult to locate because the numbers look so similar. The most effective way to find a transposition error is to find someone else to read off the real numbers one by one, while you check your ledger for accuracy. 2. Customer Allocation Errors If your customer accounts are not accurate but your bank reconciliation seems to be, it’s likely that the same number in a transaction is being checked off but the customer attached is different. In your bank reconciliation, you may have checked off a $300 payment from John Smith when the $300 payment was really from Jane Smith. Everything will appear accurate through the reconciliation, which makes this difficult to catch. To resolve this, make sure you specifically check and note the names when applying payments. 3. Incorrect Check Entries Check entries can be incorrect for two reasons: outstanding checks may remain outstanding for too long or the wrong checks may be included in the reconciliation. You should always check the checks by check number in addition to amount — otherwise you could clear check #122 for $400 when you should have cleared check #123 for $400. Checks should also be voided after they have expired, which is usually after 90 days. If you don’t void checks on a regular basis, it will appear as though you have far less money in your account than you actually do, even though the reconciliation will be correct. Frequent issues in bank reconciliation are often caused by problems in the actual accounting protocols. Automating your processes — such as bringing transactions automatically in through a bank account — can reduce many human mistakes. There are also many accounting services like Hurren Sinclair MacIntyre CPA’s LLP that […]

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