What Self-Employed People Should Know About CRA Audits

Audits are determined based on risk assessments.  The CRA needs to complete audits in order to ensure that compliance with Canadian tax legislation is maintained.

Being self-employed also increases the likelihood that your return will be audited. However, if you have an effective and well-organized record-keeping strategy in place, such as using QuickBooks (QuickBooks Self-Employed too) you shouldn’t have to worry if you are audited.

Recording-Keeping Strategies

As a business owner, you are obligated to report all of your business’s income and expenses, and you are required to keep records of them for at least six years.

How an Audit begins

If the CRA decides to audit you, an auditor will contact you to set up a meeting. It may take place at your business or off-site at another location.  The auditor will provide a fairly detailed list of things they want to be made available for them at the audit or prior to the audit. We know being audited may be a scary thing for many small businesses, but it shouldn’t it be. If you’ve kept all your records for the claim you’ve made, the CRA will just check those records to make sure things match what you’ve claimed.

To learn moreabout business auditsvisit the CRA website at:https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/changes-your-business/business-audits.html.

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Accounting and Bookkeeping – What’s the Difference and Why Are They Important for Every Business?