Getting Audited? Here’s What You Should Know

Getting audited by the CRA (Canadian Tax Revenue) is scary. It’s the stuff of nightmares. There are multiple reasons why your personal or business finances have been audited. The best thing to do with an audit is to cooperate and be honest. Here is everything you should know about getting audited.

Audit Reasons

There are tons of reasons you could be getting audited. Cash businesses such as restaurants get audited more frequently than others. Businesses that claim to make more than the industry average for the year are also at a higher risk of being audited. The CRA also has audit projects, where they will target certain industries that have a higher non-compliance rate.

You could also be audited because of a something called a secondary review. That is when the CRA audits you because you are a spouse, investor, and supplier of a company or individual that is undergoing a main audit. This is done so that your records match the ones of the main audit. The CRA will also do random audits. Always make sure you are compliant because being resistant will only make things worse.

Audit First Steps

The first thing that will happen during an audit is that you will be contacted by the CRA. Make sure you receive a written notice to make sure it’s a legitimate audit and not a scam. Ask them for a list of documents they want and work on compiling them. Make sure to contact your Toronto chartered accountant to get their aid with this.

Documentation

Certain documents will be required during a CRA audit. Sometimes all of them are requested and other times it's only specific ones. Receipts, bank statements, income forms and other documents will be requested. Work with your accountant and bank to make sure you get everything they ask for.

Addressing Problems

The CRA should be clear about what issue they want to resolve with an audit. Maybe they disagree with you about income or expenses you claimed. Maybe the car expenses you claimed aren’t accurately documented. The key to a smooth audit is to show valid reasons and support for your claims.

Results

All issues will be resolved at the end of an audit. You might have to pay a balance or you might not owe anything else. The CRA will send you a document letting you know. You and your accountant will have some time to decide if you accept their results or if you want to challenge them.

Conclusion

An audit is scary but it isn’t the end of the world. Stay calm and honest. The best thing to do is consult your small business accountant at every step of the way. It’s important to remember that just because you’re being audited doesn’t mean you did anything wrong. Stay compliant and things will work out.

Accounting Software Comparison: Xero vs. QuickBooks Online

Inuit’s QuickBooks Online has dominated the cloud accounting software for years. Recently, another competitor has arisen to challenge them- Xero. QuickBooks Online still has the majority of the market share, but Xero is growing at the same rate of them now showing it to be a worthy competitor.

Many small business owners see these two programs and wonder what the difference between the two are. They both offer similar features but there are a few differences between them. To help you determine which accounting software is right for your small business we’ve compared them to you.

Cloud Accounting

Both software is cloud-based accounting ones. Cloud accounting is when financial data is remotely stored in cloud servers. There are many benefits to cloud accounting. Cloud accounting has increased security, tends to be cheaper, and allows for remote access and real-time updates. So whether you choose Xero of QuickBooks Online you will get the benefits that cloud accounting offers.

Users

When it comes to QuickBooks Online and Xero cloud accounting, the number of allowed users is one of the biggest differences. Xero offers an unlimited amount of users, no matter what subscription package you have. Unfortunately, QuickBooks Online only allowed one, three, or five users depending on the plan you have. If you have a small business that requires multiple people to use the accounting software then Xero might be the option for you. Adding additional user to QuickBooks Online can quickly become pricey.

Use

Neither Xero nor QuickBooks Online would be so popular if they weren’t so easy to use. Both of them offer easy navigation, a nice layout, and tons of useful features. Many accountants say that Xero is slightly better when it comes to ease of use, though. A common complaint about QuickBooks Online is that they have some unnecessary navigation steps and minor bugs.

Pricing

Pricing is a big factor for small business owners when it comes to choosing bookkeeping software. It is a little difficult to compare Xero and QuickBooks Online, as their packages don’t always offer the same things. QuickBooks Online offers a great deal for a company that needs the bare minimum for bookkeeping. For more comprehensive plans, though, Xero offers far more for a lesser price.

Customer Service

Customer service and support say a lot about how a company cares about their clients. Luckily, both Xero and QuickBooks Online have good customer service. In the past, people had some issues with QuickBooks Online but Inuit appears to have listened and fixed those problems. Both have proven to be great at fixing small issues. Accountants and clients say Xero does slightly better when it comes to solving bigger issues as they have a faster response time and representatives that know what they’re doing.

Security

A common concern small businesses have about cloud accounting is software. Accountants swear by cloud accounting software such as QuickBooks Online and Xero though. Both companies excel at making sure your small businesses financial data stays safe. Between secure data centers, encrypted passwords, and authorized accounts your information will be safe and protected.

Verdict

Both Xero and QuickBooks Online are great options for your small business accounting needs. Xero pulls ahead in some categories but QuickBooks Online has years of experience. If you’re still having a hard time deciding between the two ask one of our Toronto chartered accountants which one would be better for your small business.

Small Business Accountant: Is Hiring One Worth It?

A big dilemma that small business owners face is whether or not they should hire an accountant. There are lots of factors that go into whether or not a small business accountant is worth hiring for your business. For some people, hiring one once a year for taxes is enough, but for others hiring one long term is more useful. Here are all the factors you should look at to determine if hiring a small business accountant is worth it for your business.

Skills

Your own skill set is an important factor to consider. Small business owners wear many hats, from management to bookkeeping. But if you’re not training in accounting or bookkeeping doing it all yourself could be a mistake. Even the smallest financial error can be detrimental to your business. A chartered accountant will help prevent these mistakes from happened.

Time

Wearing so many hats means small business owners don’t have a ton of time. Why do more than you have to? Hiring an accountant will save you time. It will free up valuable time that can be spent focusing on other parts of your business.

Money

A big reason small businesses don’t have an accountant is money. In fact, if you’re looking at if it’s worth its cost is probably what you’re looking at most. The fact is that a chartered accountant will give you a return on investment. They will find bookkeeping errors, always make tax deadlines, will find tax breaks, and help you budget. All of this will end up saving you more than you’re spending.

Stress

Running a small business is incredibly stressful. Hiring an accountant will help remove some of the weight off your shoulders. Dealing with small business finances can be time-consuming and frustrating, so why not hire someone else to deal with it?

Advice and Help

Added bonuses many people don’t know about hiring an accountant is the advice and help you get. A small business accountant can make a budget, provide strategic advice, and help expand and grow your business.

Taxes

Maybe you’re not sold on hiring an accountant for everything yet. There’s nothing wrong with trying one out by hiring them just for tax season. Taxes for small business can be overwhelming and they are super important as the CRA keeps a close eye on them. An accountant will sort out your books, file the paperwork, and be sure to get you tax breaks.

Contact a Toronto Chartered Accountant today to talk about how we can help you with your small business accounting needs.

Signs of a CRA Scam

Each year, more and more people are falling victim to CRA scams. These aren’t scams being done by the Canadian Revenue Agency but rather people scamming others by pretending to be the CRA. It’s easier to fall trap to these ploys than most people think. Many go to great lengths to be convincing. By using fake CRA identification numbers, make replicas of official websites and forge official looking documents. If you look for these signs though you can keep yourself safe and be able to identify one.

CRA Calls

One of the most common scams that people pull is calling individuals to claim they owe tax money that needs to be paid immediately. Don’t ever believe these calls. The CRA will never call and demand and immediate payment. In fact, they never even call without having mailed you a bill or notice first. It’s easy to see how people would fall trap to this scam, though. The fear of owing money to the CRA can be intense. Never give any information over the phone and double check by calling the official CRA number.

Payment Demands

The CRA will never call, email, or mail a bill demanding an immediate payment without giving you the opportunity to question or appeal them. The CRA will always work with people to find a payment schedule that works for them. The real CRA will take the time to answer questions and discuss payment methods and timelines.

Required Payment Methods

Certain payment methods are preferred over others when it comes to scam artists. This is why most CRA scams will require you to pay only using these specific methods. The real CRA has a long list of acceptable payment methods. Wire transfers, cash, and prepaid debit cards tend to be favored among scam artists as they are hardest to track.

Credit Card Numbers Over the Phone

CRA scammers will ask for credit and debit card numbers over the phone. You should never give out this information over the phone unless you know for sure who is calling. The CRA will never ask for this information over the phone. If you have given your card numbers out over the phone contact your small business accountant to check your finances.

Threats of Law-Enforcement

It is true that if you don’t pay your taxes or have committed fraud you could face legal repercussions. However, the CRA will never call and threaten you with law-enforcement. There is a long legal process for CRA fraud issues. A popular CRA scam is to threaten people with jail time or calling law enforcement if a payment isn’t made immediately.

Email Phishing

Email “phishing” is when scams happen through the web or email. Scammers will send out official-looking emails with links to official-looking websites to trick people into believing they are the CRA. They seek out personal and financial information to be used against them. Pin numbers, social insurance numbers, and credit card numbers are frequently asked for. Always show emails of this nature to your accountant or call the CRA to double check the validity.

Tax Refund Scams

Sometimes scammers don’t ask people to pay but instead ask for information in order to receive tax refunds. If you are going to receive any tax refund you will be mailed an official notice from the CRA. Always double-check everything before giving out information.

What To Do If You Come Across a Scam

When you come across a CRA scam there are a number of things you should do. Double-check everything with your Toronto chartered accountant and the CRA. Contact one of the CRA hotlines and file an official complaint. If you think you have already fallen victim to a scam and notice issue with your financial data contact the police.

Chartered Accountant: What to Look For

Hiring a Toronto chartered accountant can benefit both your business and personal finances. It’s important to know that not all accountants are the same, though. This person is going to have access to your financial data so you want to make sure you’re hiring the right person. When you’re hiring a Toronto chartered accountant, look for the following things.

Referrals

            Word of mouth referrals is how most chartered accountants get the majority of their business. Getting a referral from family, friends, colleagues, and others are the best way to know if an accountant is good.

           

Determine Your Needs

            Before you can hire an accountant you need to determine what you need them for. Chartered accountants can specialize in different areas of finance, from small businesses to personal. You don’t want to hire a corporate accountant for your personal taxes.            

Licensed Professionals

            The first thing you should verify before hiring any chartered accountant is that they are fully licensed to practice. You should also make sure they are licensed for what you need them for since there are variations of accounting certifications and degrees.

Accessibility

            You want to hire an accountant that will have time for you and your needs. If you like in person meetings make sure you can access their office or if you prefer remote communication make sure they’re available to answer your calls and emails. If you don’t have access to them, what is the point of hiring them?            

Price

            Ask the chartered accountant about their pricing structure before hiring. Is there a set fee or is it hourly? You want to know exactly how much they’re going to be charging you and why.            

Technology

            We live in a technological era so it’s a good thing to ask about what technology the chartered accountant used. Ask them about digital filing, cloud accounting, and remote communication. They can also provide recommendations for accounting programs and software.

Likeability and Trust

            You want to be able to trust the person you’re hiring to handle your financial information. If you’re going to be working closely with them it could also be important to make sure you like them as well.

Qualities Needed to Excel As A Toronto Chartered Accountant

To make it as a Toronto chartered accountant there are a few qualities, traits, and skills you need to excel. People put trust in their accountants to handle their confidential and important financial data and they expect quality services in return. Having the following qualities will help you as a chartered accountant.

Organization

    As an accountant, you have to keep all the figures, data, and paperwork in order. An effective organization system that helps you maximize productivity is vital to excelling. A good Toronto chartered accountant will have top-notch organization skills so that their clients never have to deal with you misplacing vital paperwork.    

Time Management

    As a chartered accountant, you will have to keep track of schedules, deadlines, and meetings. Many accountants not only file financial data but they also have the additional tasks and roles of providing financial advice and decision-making. Getting a reputation for filing data late or missing meetings will not help your reputation.

Creativity

    You might be surprised to learn that a good chartered accountant also has to be creative. No every case or client will fit into a standard textbook solution. Toronto chartered accountants need to be able to think out of the box.    

Attention to Detail

    Chartered accountants have to have good attention to detail. The smallest mistake can have extreme consequences when it comes to accounting. You have to be able to catch not only your own mistakes but your clients as well.

Communication

    To excel as a chartered accountant you must be able to communicate effectively. You’ll have to communicate with colleagues as well as your clients. Miscommunications can be as detrimental as accounting errors.    

Trustworthiness

    Bottom line, if people don’t trust you they won’t hire you. As a chartered accountant, you are dealing with confidential, important data. Whether the client is a large corporation, a small business, or someone’s personal finances, they have to trust in your integrity and abilities.   

Patience

    A Toronto chartered accountant has to have patience. You will need it when working through endless numbers when you wait seemingly forever for a client to get back to you, and when you’re explaining how to fill out a simple form for the hundredth time. 

Professionalism

    Being professional at all times, even when others are not, it an important quality in a chartered accountant. Keep emails and phone calls cordial and even when you’re getting blamed for something you didn’t do you must take it in stride. Nothing will make you lose clients faster than being unprofessional.    

Being a Toronto chartered accountant is hard work, but by working toward gaining and honing these few qualities you can excel at the job. Contact us today if you have any more questions.

Why You Should Get QuickBooks Online For Your Small Business

Bookkeeping is one of the most time consuming and stressful parts of being a small business owner. It’s seemingly never-ending and can become overwhelming. Luckily in this age, there is accounting software such as QuickBooks Online that can help you better manage your financial data. Here’s why we recommend you getting QuickBooks Online to help you manage your small business accounting.

Price

    Even the most basic QuickBooks Online package offers everything you’ll need to manage the books. Every key feature you could want or need is offered even at their cheapest plan, unlike other software, which can be pricey especially as you add more on. Every package of QuickBooks Online can be customized to your pricing and accounting needs.

Easy To Use

    QuickBooks Online is extremely easy to use. With its navigation and dashboard, you can see the financial health of your business at any time. This software also boasts a friendly and professional customer service team to help you with any needs or concerns you have along the way.

Time Saving

    Most small business owners will tell you they spent more time on bookkeeping than they’d like. With QuickBooks Online you don’t have to anymore. This accounting software is a huge time saver. Tasks can be automated and financial data between bank accounts can all be synced to make everything easy for you. QuickBooks Online allows you to spend less time working on your books and more time actually running your business.

Accountant-Approved

    Most accountants already use QuickBooks so whether you already have an accountant or are looking to get one in the future chances are they already know how to use this software. Sharing vital and necessary data with your accountant also becomes significantly easier and safer with QuickBooks Online as your accountant can sign in and see everything you need them to.

Cloud Accounting

    QuickBooks Online is a cloud accounting software, meaning your financial data is stored in secure and remote cloud servers. This data can be accessed anywhere at any time through encrypted passwords. Real-time changes and updates make it easier for you to run your small business. There are even more benefits to cloud accounting which you can read about here.

If you own and run a small business consider getting QuickBooks Online today. With this software you’ll have an easier time with bookkeeping and more time to focus on what really matters, running your business. If you would like to know more about QuickBooks Online or want to talk to an accountant contact us today.