How to Keep Audits Away from Your Business
Nobody likes audits. They’re a headache, take up a ton of time, and can even cost you money if things go sideways. The good news? Most audits aren’t random. They’re triggered by stuff you can actually control. Let’s talk about how you can keep your business off the CRA’s radar.
Get Your Income Reporting Right
One of the biggest red flags for the CRA is when your income numbers don’t match up with what they have on file. If you say you made X amount but they have different numbers, expect a call. It’s crucial to double-check your income reports and make sure they match up with your T4s and T4As.
Deductions: Don’t Push Your Luck
Deductions are great for lowering your tax bill, but if you get too greedy, you’re asking for trouble. Claiming sky-high deductions with little income to back them up is like begging for an audit. Keep it real and make sure you can prove every deduction you claim.
The Home Office Deduction: Play by the Rules
Working from your kitchen table doesn’t automatically qualify it as a home office. For the CRA, your home office needs to be just that: a space you use only for work. And you better have the paperwork to back up any deductions you claim for it.
Payroll Taxes: Don’t Mess Up
Screwing up your payroll taxes is a fast track to Auditville. Whether it’s filing late or getting the numbers wrong, these mistakes get noticed. Stay on top of your payroll game to avoid unnecessary attention.
Cash Transactions: Keep Clean Records
If your business deals a lot in cash, you’ve got to be extra careful. The CRA knows cash is easy to hide, so they watch these businesses closely. Make sure you document every transaction, big or small, to prove your income is above board.
Staying out of audit trouble isn’t rocket science. It’s about being careful, honest, and organized. Keep your records straight, report your income and deductions accurately, and you’ll have nothing to worry about. Because the best way to deal with an audit is to avoid it in the first place.
