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Jackie Joyner-Kersee

Business Advisory, Personal and Corporate Taxes, Business Start-Up, Bookkeeping

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What To Expect When You’re Expecting (An Audit)

Posted May 31, 2019

I’ve Been Selected For an Audit—Now What?!?

The Canada Revenue Agency (CRA) performs many audits of personal and business taxes each year, and you may be selected for their close scrutiny. This is not the end of the world, and it does not mean you have done anything wrong. The CRA does audits to ensure that all taxpayers are playing by the same rules, and to maintain taxpayer confidence in the taxation system.

A note regarding tax and audit scams—the CRA will NEVER call you and threaten you with heavy fines and jail time out of the blue. An audit is a process that you go through with an auditor from the CRA; they will work with you and inform you of their findings, if you have been re-assessed and need to pay more taxes. If you receive a call that seems like a scam, call the CRA at 1-888-495-8501 and find out for sure before paying anything or giving out any information.

The Audit Process Itself

The first step in a possible audit is a tax review. This is the most common interaction people have with the CRA—the CRA contacts you with a request for more information and back-up documentation. If you have been a diligent record keeper and you respond quickly with the information the CRA is looking for, this will likely be the end of it. If Shaw & Associates Chartered Accountants have been doing your taxes, your first step is to call us to handle this for you.

The next step is the formal audit process. The CRA will be looking for information and documentation, and they will come to a formal conclusion about your taxation situation. They will create a proposal for you, where you are assessed as no changes required, having overpaid (in which case you will get a refund), or having underpaid (in which case you will need to pay the additional taxes immediately or face fines and/or penalties). You can also file an appeal after the CRA has finished your audit.

We’ve Got You Covered

If you are already using Shaw & Associates for all your accounting, they will deal with the CRA and the audit on your behalf. If you aren’t a client of ours, we can still represent you through the audit process.

The quicker you respond to the CRA, the better. Information requests or formal audit proceedings won’t go away if you ignore them; you could make matters worse for yourself, though, by accruing penalties, interest owing, and losing the goodwill of your auditor.

Shaw & Associates will also be able to tell you if your audit is straight-forward enough to be handled by an accounting firm, or if you will need to get a tax lawyer involved. Any way you look at it, talking to a tax professional like Shaw & Associates if you have been selected by the CRA for closer scrutiny is a very good idea.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Risk Management and Your Accountant

Posted May 21, 2019

Progress = Risk

Progress involves risk, and risk management has become a common theme in modern business. Our accountants at Shaw & Associates can take a lead role in working to examine and manage the risk for your business.

Accountants and Risk Management

People often think that an accountant’s job is just to do your taxes. But it is so much more than that. For example, a good accountant also assists with risk management. As noted on topaccountingdegrees.org,

“One of the core competencies of the accountancy profession is improving the internal control program of an organization in an effort to managing and reduce risk. While some staff accountants may only be responsible for basic tasks, accounting managers and other lead professionals will play a role in designing, planning, implementing, executing and even monitoring risk managing activities and programs….

“The accounting profession has changed dramatically. Now, accountants are more than just number-crunchers who are stuck at a desk writing reports and balancing the books. In addition to this, an accountant is a strategic partner within an organization that specializes in risk management and helps to protect the company resources.”

Step-By-Step Financial Risk Management

The first step for the decision making involved in risk management is to keep your bookkeeping up to date—you can’t figure out where you want to go if you don’t know where you are! When your books are up to date, the next step is creating accurate, comprehensive, and easily understood reports for you, the business owner.

Future Planning

After that, we can sit down with you and look at what your potential financial risks are for your specific business. Once we have a good handle on the risks you are facing, we can work out plans to mitigate these risks and run scenarios to show you the outcome of different decisions you can take. We will also monitor how things actually play out and suggest course corrections to keep you on the right track.

Safe, Controlled Growth

You want your company to grow in a controlled, safe fashion—Shaw & Associates is your partner in planning the path to a more successful future with managed, foreseeable risks.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Succession Planning for Your Business

Posted May 1, 2019

I’ve Created a Great Business—Now What?

It is a critical part of running a business, but one that too few business owners do—succession planning.

When the current owner retires or something happens that makes the current owner unable to continue running the business, it is essential that there is a plan to continue operating or sell the business.

How Do I Get Started?

Your first step is an exit strategy—what do you want to have happen? Do you want to sell your business to a manager or your employees? Do you want to sell it to an outside party? Do you want to transfer it to interested family members?

Once you know where you want to go, your professional team (including your accountant) can help make it happen.

When Should I Do This?

The time to start planning is now; succession or sale planning for a business can be a lengthy process, and it is best not done at the last moment.

If you decide to sell your business, prospective buyers will want to see at least two years of financials (more is better). If employees or managers want to buy your business, they will probably need to get financing in place, which can involve term life insurance policies.

Who Will You Need on Your Team?

Succession planning is likely to involve at least four advisors—your accountant, your lawyer, your banker, and your insurance broker. Your accountant will be critical in getting and keeping your finances in order. Your accountant will also be crucial in advising you of tax strategies for the path you decide to take with your business.

As noted in this article from CPA Canada,

“Succession planning is a multi-disciplinary planning process and key advisors such as a CPA and lawyer should make up your advisory board. A CPA can add value when it comes to the financial plan, determining the tax implications of the business transition and helping to advise on strategies to reduce or eliminate estate and income taxes.

“The planning process may also reveal that selling the business—rather than maintaining a successive ownership—is the best option for your business.

“In such a case, proper accounting records are essential to meet the demands of future buyers and investors. A clean and audited balance sheet, reviewed and audited by an independent CPA firm, in addition to other financial statements, will be a minimum requirement.”

For a little more detail, here is a video from Main Street Financial Solutions.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Tax Avoidance Versus Tax Evasion

Posted April 23, 2019

Taxes—A Love/Hate Relationship

Canadians (like most of the world) have a love/hate relationship with taxes. On the one hand, we like the services that our pooled taxes provide, but on the other hand, we hate sending our hard-earned money to the government. Avoiding paying more taxes than your share is a smart financial move; evading taxes is a crime.

Reduce Your Tax Bill Legitimately

Reducing your tax bill legitimately means working within the tax laws and regulations and figuring out ways to take the deductions you can legally take, and report what you need to report. It might take the form of figuring out what to do and when, with one choice having a better tax implication than another, which requires tax expertise on the part of your tax preparer.

Tax Evasion Is Illegal

Tax evasion is going outside the law, and it is not a good idea. As noted by canadianaccountant.com, “It’s critical to understand the difference between tax avoidance and tax evasion. Tax evasion involves either not following or breaking the rules of Canada’s Income Tax Act to avoid or minimize taxes, thus making it an illegal activity.

“Examples of tax evasion would be failing to report, or under-reporting income, or taking excess deductions for expenses that may not have been incurred while earning income. The Canada Revenue Agency (CRA) takes this very seriously.” 

For a little more explanation on the difference between tax avoidance and tax evasion, check out this video.

Hire a Good Tax Preparer

A good tax preparer will help you figure out how much you owe and how to legitimately reduce your tax bill. They WON’T help you break the law by slipping over the line from reducing taxes to evading taxes. 

Shaw & Associates Is on Your Side

Taxes are complicated and changing every year. It’s a good idea to have your taxes prepared by someone who is familiar with the current Canadian tax laws, and is also available to defend your taxes if you happen to get audited. The tax team at Shaw & Associates Chartered Accountants are tax experts; it’s our business to know the current tax laws, and we’ll be in your corner if you need us.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


Protecting Our Customers from Fraud

Posted March 29, 2019

An unfortunate reality of owning a business is that you could be dealing with fraud at some point. As per Xero.com

“According to the world's largest anti-fraud organisation, the Association of Certified Fraud Examiners (ACFE), small and mid-sized businesses are the most common victims of organisational fraud. And the effects can be more damaging.

Small businesses report 31.8 percent of all instances of fraud—a higher rate than for larger businesses—and suffer greater losses in relation to their size. And more than half of all small businesses that suffer fraud don’t recover any losses.”

How Well Do You Know Your Employees?

Small- and medium-sized businesses are shockingly vulnerable to fraud and theft from employees. Small business owners can have long-term staff that they think of as friends or even family, and their employees can take advantage of this by engaging in fraud and theft from the business.

The First Step Is Knowledge

An important function that Shaw & Associates Chartered Accountants can offer our clients is information on how to avoid becoming a victim of employee fraud. Being knowledgeable about how fraud and theft happens within a business, and how to prevent it, can be extremely useful to our clients.

Policies Can Help Reduce Fraud and Theft

We can examine the procedures our clients have in place already, and work with them to institute new policies and procedures to limit the risk of fraud and theft. Shaw & Associates can also act as the “bad guy” if necessary — “our accountants say we can’t do this, so we have to separate these duties,” — if business owners aren’t comfortable with putting new limits on long-term employees.

Divide Your Duties!

Small businesses can often have very few people doing all the duties, some of which should be separated as a check on fraud. Having Shaw & Associates divide duties involving cash, cheques, and accounting by acting as a virtual Chief Financial Officer (CFO) can prevent in-house fraud. For example, your accounting clerk can input all the accounting data, but the cheques are run by Shaw & Associates.

Fraud is common, unfortunately, but Shaw & Associates can help you figure out where your vulnerabilities are, and fix them before a crime occurs.

Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.


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