July 26, 2012 17:34
Gregory Buck, CA
Munro & Company, Chartered Accountants
Small businesses get attacked by Canada Revenue Agency quite often so keep the following in mind:
1. Nothing is deductible unless supported by a proper invoice, including the vendor’s HST/GST number. Don’t think a credit card receipt will suffice.
2. Register for your own GST/HST. Even small businesses can benefit.
3. Ensure you have support for all deposits made to your bank account. On audit, CRA will call that deposit “unreported income” if you have inadequate support. So that loan from Dad. Document it and get proof of where it came from. Cash deposits? If no support, then don’t deposit them in your account. Remember, CRA don’t care about your opinion. They care about facts!!
4. Keep good records. There are lots of small computerized record keeping software solutions out. Intuit’s Quicken, Microsoft’s Money or NetSuite are good starters. Quickbooks and Simply Accounting are good for a little larger business.
5. Farming activities can be filed on a cash basis. This is sometimes an advantage. If you elect to use a cash basis you cannot go back to accrual. So evaluate your options before committing. You may want to get advice from a qualified accountant.
6. Payment solutions like PayPal and E-transfer will keep your cash flow current. They are easy to use and immediate.
7. Provide your financial information to your tax professional early. It takes time to plan!!