Restaurant and foodservice operators are cash-intensive businesses – which means you have to be extra vigilant when it’s tax time. Why? You’re already high on the Canada Revenue Agency (CRA) priority list. As a business owner, the liability for any questionable tax behaviour is on you. You’re responsible for any and all unreported income, as well as unremitted taxes. If you’re fearful of an audit, and believe to have been less than compliant – or even previously contacted about an audit – you need to stay ahead and be prepared.
Tips to protect your business, remain compliant and keep the CRA happy
- Your home address is not your business address. If you run an operating business and that location is separate from your home, keep it that way. Provide the CRA with your business address and keep all business and personal tax information separate.
- Keep all your regular tax filings up-to-date, most importantly your GST/HST and payroll submissions.
- Maintain detailed records. Organize your files with all your business information, invoices, receipts and bills. Proof of expenses must be provided when asked, or the CRA can add the amount as income and remove it from expenses.
Quick Tip – Scan your documents and attach them to your original record to ensure you are not left with degraded receipts.
- If your establishment is contacted about an audit, it’s critical to be honest. If your CRA collections officer can’t trust you, he or she may be more cautious during the audit. Answer all questions asked of you, but you don’t have to offer information that wasn’t required.
- File your forms on a timely basis. Regardless of whether it’s income tax or payroll tax, late filing and payment can result in penalties and interest on the balance owed to the taxing agencies.
- If you’ve been reassessed and are currently making payment arrangements with the CRA, make as large payments as you can afford. The sooner you have this cleared, the better for your business.
- Whether your business depends on accounting services, or you manage it yourself, compliance is crucial. It may be safer to let professional accountants take care of this so you can focus on larger business operations.
Last, but not least – be easy to work with. CRA collections officers are just doing their job, so help them make this easy for you too.