The CRA scrutinizes the tax returns of small businesses especially closely, so Canadians who are self-employed always have a higher risk of being audited than those who are employed by others.
And while there’s no sure-fire way to avoid a CRA audit, you can cut down the odds by avoiding known audit triggers.
If you want to decrease the chances of your small business being audited by the CRA, avoid these attention-drawing triggers on your income tax:
1) Revenue discrepancies.
2) Being an outlier.
3) Deducting large business expenses.
Learn the ins and outs of claiming meals and entertainment expenses.
4) Changes in shareholder loans and large balances.
Corporate business owners also need to take heed that changes in shareholder loans or debit balances are red flags too. The CRA looks for personal expenses recorded as business expenses and loans taken from a company.
5) Having family on the payroll.
The family member must be active in the business, maintain employee records and salary be comparable to an outside person doing the same job.
On a completely different note:
Have you recently had one of those days (or few days) where you just can’t seem to get motivated?
At times, I find it very difficult being an entrepreneur, responsible not only for my own livelihood but also for my staff, who I care for deeply. Often we are told by those who have never been entrepreneurs, “Oh, it must be so nice to have your own business. You can set your own timetable, take time off when you want, write off expenses, be your own boss…” I’m sure you have heard all of this and more. What non-entrepreneurs don’t realize is that the buck starts and stops with us and, at times, it is an overwhelming burden to bear.
There are days you just want to get off this train, but you can’t. What to do?
Well you could shut it down, which I would say rarely, if ever, enters our minds. That’s just not in our entrepreneurial makeup.
So, I thought I would share with my fellow entrepreneurs what works for me:
Winter can be a particularly hard time for us Canadians. For those of us who have no choice but to work during February/March when many snowbirds have the luxury of heading south, the blues and procrastination can get worse. I have a few ideas to help with that:
I hope these tips help you. Remember, soon it will be summer! And I encourage you, the fellow entrepreneur, to every so often in the middle of a week that the sun is shining – get out there and enjoy it, every bit of it. Because apparently we are being told by those not truly in the know we’re allowed to!
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