Before the Auditor Visits Prepare

Are your records ready for an audit? When CRA calls, it helps to be prepared. One of the items they will request is a detailed listing of all of the invoices on which you claimed HST. The list needs to include the name of the supplier and the date of the purchase and a description of the services purchased. They will also ask to see copies of bills showing the suppliers HST number and the amount of HST charged. They will give you a month to prepare and if it coincides with your busy season, it may be difficult to comply within the time period. This list needs to agree to to your HST report.

Be sure to reply to the auditor right away and let him or her know if you will have difficulty meeting the time frame. Being courteous will make everyone’s’ job more pleasant. It is a good time to advise your accountant and if you think their are legal issues consulting a tax lawyer can be helpful.

Audits can be carried out at your place of business or by mail or fax.  Even a simple audit takes some time to prepare for. To make your audit experience is as painless as possible, have a policy of checking  vendor invoices for registration numbers before posting to your books, always asking for a copy of a proper receipt and filing them so they can be quickly retrieved.

In a paperless world, documents can be hard to find or lost when computers are upgraded. Paper records are still the best way to make sure that you have the information at your fingertips.File them in a manner that makes them easy to find. If you do not have time to file buy a Staples plastic box and throw them all in at regular intervals. The sorting can wait but at least you will not have to search, the house, the truck, the office and and your business case all at time.

Remember that there are restrictions on the amount of tax that can be claimed on meals and entertainment and golf expenses. The purchase must also be for something that is used in the your commercial activity and not for personal use.

HST is due in the period when the invoice is created, not when it is paid.

If you find mistakes that you have made, don’t worry we are all human.