-snip-Originally Posted by cyrus
Hi;
First off , I mean absolutely no offence what so ever, no insult, but book keeping is only "simple" to those people who have never been through any kind of audit before.
First rule of any kind of audit or government inspection is "where's the paper". Records on computer mean nothing in an audit - you will be expected to produce the paper, and ASAP too.
After that, well, you never look at book keeping agian quite the same way.
As somebody who operates and does the bookwork fro two incorporated companies - both small, both in Canada, a couple of observations that hold true for *any* country on this planet.
1) It is sometimes wise to hold back on some deductions, but keep the full records. Any auduitor, anywhere, in any juristiction, can always find something. Tax laws are setup that way. The Canada Income Tax act is physically longer than the Bible (small print too ) and no one person inthe country knows every aspect of it, so an auditor cna always develop a "new interpretation". same goes for the IRS, or any other country (I keep in contact with other business people in other countries).
So, when the auditor "finds" something you missed, you go - oh, no problem, and by the way, I fogot to take this decution here - while you are re-evaluating my deductions, woudl you add in this oen I forgt?" It's an old trick an old tax account taught me years ago,a nd yes, once in a blue moon, it saves your bacon.
2) any company setup to make money by use of deductions is just asking for trouble. The government does not like to hand out money, even when youa re in the right. Took me 3 months to get $300 I overpaid the government this past year. Grrr....
3) Loook carefully at what deductions governments pay attention to,a nd what they do not. example, in addition to company work, I used to be treasurer for a small government funded health clinic for about 6 years. If we needed a new peice of medical equipemnt - baby scales for example (drug dealers love to steal them as they are used for weighing out the drugs they sell), well, it could take some weeks or even months to get funding for a replacement. But when it came to computers or software, there never seemed to be any issue at all. Never a question why we needed more ram, bigger ahrd drives, etc, but explain why you need a new examination table, that would take time.
So the point I am trying to make to all of you, say you do have a side business, you might have to justify to an auditor some day why you need that new Super Angulon, but that same auditor may never question why you need a new laptop. Certianly not fair, but that's sometime how the system works. Learn it and work with it.
That's all for now - just be carefull.
joe
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