Your Tax Preparation may need to include an External Audit
Even if you’ve created some solid internal financial processes and have a good understanding of Canada Revenue Agency rules, an external audit can improve your tax preparation process and add credibility to your financial statements. While having an external auditor come in may be thought of as a negative experience, they can prove to be very helpful and provide insight into improving cash or capital-management techniques that will grow your bottom line.
An external auditor is an unbiased party with no affiliation to the company who can double check financial records, recommend ways to improve accounting practices and make sure that your company is in compliance with Canada Revenue Agency rules. Using their services will help to ensure that the documents you complete for tax preparation are the most efficient and accurate they can be. Their work can also detect any errors or fraud that may derail your company before they become crippling issues.
In the event that you are selected for an audit by the Canada Revenue Agency (CRA) even after all the tax preparation you completed, there are tax audit solutions available to help you through the process. If you have already completed an independent external audit, you will be much more prepared to go through a CRA audit. Other tax audit solutions include working with an accountant who can help walk you through the requirements and make the daunting process as manageable as possible. If you feel like you could use the support of an accountant during a CRA audit, be sure to find one that comes recommended by trusted professionals in the field.
There are also things that you can do, as part of the tax audit solution that will help with tax preparation or add clarity when going through an audit of any kind:
Take the time to complete detailed expense statements. When assumptions have to be made, they usually aren’t in your favour. Having to go back and think about the details around a purchase that was made 10 months ago is not something you want to spend your time doing.
Bad bookkeeping is a huge source of missed deductions which leads to lost money for business owners. Find a way to keep your books up to date and accurate, at a minimum of once a month.
If you hire a bookkeeping service you must be willing to work together – they can only produce quality books if you provide them with the most complete information. Do your part to keep all receipts, forms, invoices, statements and anything else that will help produce a complete picture of your business financials.
Business owners must understand that tax preparation is not just something that happens 30 days before taxes are due! Take a proactive approach to your financial health and we know you won’t regret it.