When an incorporated business in Vancouver calls asking for professional representation for a CRA audit, the first question I ask myself is “Why is the person who was paid to prepare the tax return not doing the representing?”
A very common answer is something like “My wife who is not a professional accountant prepared the tax return. She does not have the knowledge to deal with the CRA.” However, this year, I received an unexpected answer: “My accountant has been charged with fraud.”
The reasons as to why Vancouver small businesses turn to friends and family to do their accounting and tax filing varies. The majority of the time, it is because the business owner is trying to save money, but is money really being saved? Lack of knowledge and experience can cost the taxpayer more money in the long run. Also, friends and family don’t always have the spare time to do the books and file on time, resulting in interest and penalties. Basically, the cheap bookkeeping costs that the business owner experiences now could be more than off-set by the final costs of untangling a bungled mess later on.
How do small business owners in Vancouver avoid accountants who are fraudsters? Well, you avoid them by using your common sense! Find out the professional accounting body the accountant belongs to and call the regulatory body to ensure he/she is a member in good standing. This will only take you 10 minutes and in the end will save you a legacy of headaches. There are only three professional accounting designations in British Columbia. They are: Chartered Accountant, Certified General Accountant, and Certified Management Accountant. If the accountant does not belong to one of the three bodies, they are NOT a professional accountant regardless of what their business cards and signs might say. Visit the accountant’s office before handing over any documents as well – this gives you another opportunity to analyze the situation from a different perspective. Is the office in a business neighbourhood? Is the office well furnished and well established? Are there other staff and partners? Another reason to choose a professional accountant is that they are insured. Penalties and interests incurred by the taxpayer due to errors on the professional accountant’s part are covered under an insurance policy.
Many business owners have the common sense to seek professional representation when pressed with a CRA audit. By then, all the professional accountant can do is try to limit the scope of the audit and ensure that the grey areas of income tax laws are interpreted fairly. Sometimes, CRA uncovers errors, intentional or unintentional, and taxes will be adjusted and interest will be applied. In more serious cases, there will be penalties on the taxpayer as well. Regardless of the outcome, it is clear that the business owner should do whatever they can to avoid another future audit, including (and especially) through using a qualified and insured professional accountant.
If you have any questions or would like to know more about how we can help you, contact us.
Disclaimer: All Rights Reserved for Mew & Company. This blog post is designed to provide information for personal use only. Please consult your professional tax advisor for further information. Mew & Company is not responsible for any legal disputes resulting form the content of this blog post.