Corpcentre's Blog

May 11, 2010

What Happens if I Get Audited?!

It’s certainly not a campfire horror story but many Canadians fear that they may be subjected to a tax audit. Is there basis to that fear?

The truth is that, for most personal tax returns, the chances of an audit are slim. The vast majority of Canadians, more than 90%, completes their tax returns accurately and files them on time. Of more than 26 million personal and corporate returns filed annually, the Canadian Revenue Agency (CRA) audits less than 2%. Most personal returns are accurate as the bulk of personal income is recorded on T4 slips. However, returns from small and medium sized businesses may be prone to error or may be fraudulent. As such, most CRA audits are directed at the business community.

This is not to say that you should assume that whatever you include in your personal return will slide through unnoticed. For example, if you live in a neighbourhood of stately, expensive homes, yet your income is barely above minimum wage, you may expect to be queried by the CRA as to other sources of income to support your lifestyle.

Should you be chosen for a tax audit, it is wrong to assume that the CRA is searching for criminal activity. A tax audit is conducted to ensure compliance with the Income Tax Act. An auditor may actually discover that you overpaid taxes and a refund is due. In any event, don’t be confrontational. Cooperate with the tax auditor and make all your records available. It is possible that you made an honest error and you have the opportunity to discuss this with the auditor. The auditor is also well versed in tax issues and may be able to offer helpful advice in your tax matters.

Overall, be prepared. Keep careful records and don’t discard them immediately after filing your return. If the tax auditor knocks at your door, be ready and be helpful.

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May 9, 2010

How to Master Canadian Taxes Before Next Year

If you compiled a list of Canada’s greatest complexities, chances are very good that the Canadian Income Tax Act would command a respectable spot on that list. In recent years, it has expanded incredibly, becoming a quagmire of confusion to the average citizen. It is no wonder that more than half of all Canadians now secure professional help to prepare and file their tax returns.

Have you tried to hold a conversation with a tax preparer during tax season? It is limited to several words as most tax professionals literally work around the clock to prepare as many returns as possible. If you are one of the clients, appreciate that your expectations are linked directly to your level of cooperation. In other words, your accountant cannot use information, sometimes basic and crucial, if you don’t supply it. Due to the tremendous workload and seasonal pressure, the accountant may not ask every question. Therefore, be prepared to supply certain information, along with your receipts and T4’s or T5’s.

The amount of tax you pay depends on a number of key facts that your accountant should know. Marital status and exact age are crucial as these affect possible tax credits or deductions. Your children, depending on their ages, create numerous tax credits and deductible expenses. Accuracy is essential; there is no room for approximation.

If you were employed at several jobs, be sure that each employer is listed in your return, even if you did not receive a T4. You are responsible for paying taxes on earned income and your accountant must be aware of every dollar that you earned.

If you own a business, compile a detailed list of every possible expense and revenue. Your accountant can decide which are not relevant, if any. Don’t make assumptions by yourself; let the professional decide.

List all your financial holdings, including any overseas investments. With all the pertinent information available, your accountant can determine your tax liabilities. Similarly, don’t forget to list “non-employment” income such as rental income, capital gains from sale of property, etc.

Finally, don’t forget medical expenses. Keep all your receipts for treatments, medications, insurance, etc. You paid dearly for your health and some of the expenses may return to you.

Spend some time researching tax credits and benefits. If you’re not sure whether you are eligible, ask your accountant. It is better to err on the side of caution. It’s easier to remove some numbers but much harder to add them if they were never included.

Incorporate in Canada with CorporationCentre.ca
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May 5, 2010

How Can I Find a Good Accountant?

May 2010; the tax season is behind us for another year. If you are like almost half the Canadian population, you prepare your own taxes each year. But, as the Canadian tax code is growing increasingly more complex, a greater number of Canadians are seeking professional assistance from accountants in order to reduce the risk of paying unnecessary taxes.

Locating accountants is relatively easy. Finding the accountant suitable for your specific needs is far more difficult. Canada boasts three professional accounting bodies whose members are certified to serve the accounting needs of the nation. However, each organization has different standards and requirements for membership. Therefore, if you are shopping for an accountant, it’s best to decide precisely what your needs are and interview prospective accountants carefully.

By far, Chartered Accountants (CA’s) are the best trained accounting professionals. Only CA’s can audit and sign financial statements. Roughly 40% of CA’s in Canada work with the public, while the remainder is employed in the private sector, government, or education. Although advertisements for CA’s will make many claims, it is wise to get several references.

In addition to CA’s, Canada also has 37,000 Certified Management Accountants (CMA’s). Generally, CMA’s do not have private practices but, rather, work in large organizations, monitoring and interpreting operating results to help management develop operating strategies. Nonetheless, a CMA should have adequate training to help a small business or a self-employed individual with basic tax management and preparation.

Finally, Certified General Accountants (CGA’s) offer a little something for everybody, working both in private practice as well as corporate or government settings.

Whomever you choose, your best bet is to ask friends and colleagues for recommendations. Also, take the time to interview at least three prospective candidates. Be sure that the chemistry is right between you. But, as much as possible, try to be your own accountant. A wealth of information is available online today. If you can’t do it yourself, gather as much information as possible so you know what to request of your accountant. By learning to prepare your own taxes, you’ll gain valuable insight into managing your everyday financial affairs.

Incorporate in Canada with CorporationCentre.ca
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May 4, 2010

How to Make Yourself Invaluable to the Customers

Let’s face the facts. If you ever believed that attracting new customers was your biggest business challenge, you were sorely mistaken. Winning customers is less than half the battle. The bigger challenge, most business owners would agree, is how to keep them. After all, if you devoted most of your energy in trying to attract a customer to you, logic dictates that someone else is also trying. Therefore, you have to work extra hard to retain that customer, rather than their moving to the competition.

But, how do you put that theory into actual practice? If you have developed a successful service or product, chances are very good that your competitor is working on an improved version. And, the improved version just may sway the customer from you to the competition.

The human aspect is a vital component of success. You have to create an environment that a customer will regret leaving. Certainly, business is about sales and strategies, finance and finesse. It’s also all about people. Becoming more than a supplier of goods and services is the secret link. Learn to appreciate that your customer has needs outside of normal office hours. Be ready to go the distance for your customers and they will remember. Make their concerns your concerns, even at the risk of having a major headache. Also, think outside the box. How can you help your client’s business, above and beyond what you already supply? Work hard to make yourself an extension of your client’s enterprise. The customer should know and feel that you can always be counted on, no matter what or when, even if they only need advice. True, talk is cheap but it can be an investment with a fantastic return.

From the first time a new customer comes through your door, approach the moment as the start of a long term relationship. If you proceed along those lines, you will have laid the foundation for a bright future.

Incorporate in Canada with CorporationCentre.ca
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May 2, 2010

The Key to Customer Relations

Here’s a timely riddle. What is the definition of a terrific sale with no customers? The answer is – Useless.

The dust has not yet settled on the recent recession yet tomes have been written, countless lectures have been delivered, and editorials that can bring a tear to your eye have become the fashion. Yet, when all is said and done, pointing fingers and laying blame will change little. Unless we walk away from the financial warfare having learned how to prepare for the next time, all will have been for naught.

A common misconception was that retail failures were due to customers not shopping. That is not exactly correct. While true that consumer spending was reduced, it did not stop. There is always a need to purchase. However, shoppers became far more particular about what they purchased and where.

A secret to retail success lies in the relationship between the vendor and the customer. Consumers are far more likely to continue supporting a particular establishment when they feel an emotional tie. As such, building a strong bond with your customers is your best strategy. They will be far less likely to abandon you, even when times are bad.

It is a mistake to think that “the sale of the century” will drive traffic your way. Certainly, you may encounter a one-time success. But, after the sale ends, customers are far more likely to return to the friendly merchant who places an emphasis on efficient, courteous service. Customers prefer to frequent establishments where they feel like someone, not something. If you always stand behind your products and services, people realize that you are providing true value. Keeping your customers satisfied – no matter how difficult that may sometimes be – is the key to customer longevity. And, at the end of the day, that puts money in the bank.

Incorporate in Canada with CorporationCentre.ca
Click. You’re incorporated ®

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