What do you do when the tax man calls? Considering previous experience I will tell you that you had better have your stuff together if you plan on making it through and audit slightly unscathed. Audits can be very intimidating and scary for most of us. If you think that the big scale guy is intimidating try dealing with the Canada Revenue Agency or the Internal Revenue Service. That is scary on a whole level above the rest. They don’t understand things like my computer crashed last month that was holding all the company records, or that you didn’t track your mileage to the safety meetings because you forgot. When we went through the audit for our business I was amazed at the information I was asked to provide. They didn’t want to know about the big things like the income and expenses from major clients, they wanted to know why the coffee shop meal was being written off. The expenses that most of us overlook as they are only a few dollars were the focus of their investigation. Now that we have successfully made it through the audit process with just a minor adjustment I wonder how many people are not ready for an audit.
Audits do two things for your business, you either begin to run a tighter ship or you decide this isn’t for you and close up shop. For those who decided against getting professional help for their business may fall into the latter because the process is very intimidating to people not in that line of work. We did have a computer crash in one of our years that has created a file that holds some serious financial data and it is only by luck that was not the period that the CRA wanted to look at. That audit made us run better which according to my accountant is the educational component that the CRA tries to do with the clients it audits. They may need to work on their delivery skills a little. They say they use it to educate companies on the proper way to account for their business, that may be true but I think there are better ways to do that.
So I ask you again, would your business pass an audit if you were selected for one? Many of us business owners especially the smaller ones don’t feel they are on the radar for being audited. That is wrong, ask any small business that was selected for audit recently. The best way to pass the audit is to get your ducks in a row now before you are selected because once selected you won’t be able to make things up. Get an accountant make sure your bookkeeping is being done properly. The biggest thing is to think like a business owner and that means getting serious about running your business. If you don’t I can tell you that you will be out of business before you know it.
About the Author
Bruce Outridge is a business and leadership consultant for the transportation industry. He helps Owner Operators operate successful businesses. For more information or to learn about the OS Program for your business visit his website at http://www.outridgeenterprises.ca