How to Avoid Audit Red Flags?
There are many deductible expenses available to small-business owners, ranging from business-operating expenses to home-based business write-offs and automobile expenses. The capital asset deductions for assets belonging to the business, such as computers, automobiles, and furniture, may be depreciated at varying allowable rates. The bottom line is, you have to handle all deductions accurately if you do not want trouble with the CRA. If you are not organized, it is easy to miss some legitimate and 100% deductible business expenses and the corresponding GST/HST that was paid on it.
Here are a few simple ways we recommend for you to stay organized and are “file ready” before the deadline:
Whether it be your home office, kitchen table, or a corner in your dining room, make sure your tax record organization area has its own dedicated space. Here, you could put everything in a box or folder if you are too busy, with the intention that you will review your paperwork on a regular basis, be it weekly, monthly, or even quarterly. You could use plain envelopes or file folders with the category label written on them. You could either use your scanner or your mobile phone to scan your receipts and save them to your computer, hard drive, or cloud storage service. Keep everything simple and organized via spreadsheets such as Microsoft Excel or Google Sheets, or invest in softwares such as QuickBooks. You may develop a habit of organizing your time either with a physical or cloud-connected calendar, such as Google Calendar. If you find yourself too busy, outsource the task to a bookkeeper or accountant to do the work for you on a regular basis.