How to Prepare Your Small Business for a Tax Audit

small business tax auditYesterday we offered up some tips to avoid the tax auditor. Sometimes, however, no amount of being good can help things from going (temporarily) bad. So what do you do if you get that dreaded phone call?

It’s perfectly understandable that you might feel a little helpless in the face of the CRA but there are simple steps you can take to help the process go as smoothly as possible.

First, calm your nerves. Chances are, even if you’re a little disorganized and you need to collect your thoughts, your small business is probably going to be okay.

Second, get answers to all of those questions swirling around in your mind:

  • What type of records will they want to see? Going how far back?
  • Can I ask for an extension or will that make the situation worse?
  • How do I make my case if I feel the auditor is being unreasonable or even abusive?
  • What do I do if I don’t agree with the auditor’s decision?

Third, learn the tried and true tips to prepare for an audit of your small business. CFIB has compiled the answers to these questions and the steps you should take to prepare for an audit, and you can find them summed up into this one-page document: What to do when the tax auditor arrives.

Fourth, call CFIB’s Small Business Counsellors. As a MyStartUp member you have full access to CFIB services, and we would be more than happy to help you in any way we can. You can reach us by telephone at 1-888-234-2232 or by email at cfib@cfib.ca.

If you are not a MyStartUp member but you are a first-time entrepreneur who has been in business for two years or less, you can join MyStartUp by CFIB for free for a full six months. If you are a small business owner who has been in business for longer than two years, join CFIB here.

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