When you get audited
It’s statistically unlikely that your company will be audited, because there are so many small businesses and relatively few government auditors. But if it does happen to you it can be expensive, stressful and time-consuming.
If you don’t already have an accountant at this point, it’s a good time to hire one. They can give you advice on how to work within the auditing process. They can also help ensure you don’t violate any Canadian tax laws afterwards – because the government will almost certainly be watching.
But it’s better to hire an accountant before an audit ever happens, especially if you can find one who will offer audit insurance. Audit insurance covers the fees you would have had to pay if your business needed to respond to an official inquiry, review, investigation or audit by a tax department. An accountant who offers audit insurance means they won’t charge any extra for the considerable amount of work they’ll have to carry out during the audit process.
Good accounting software incorporates an audit trail. This makes it easier for you and the government to see exactly what transactions have taken place over time – and who authorized them.