One common misconception that we are faced with is that bank and credit card statements can be used in lieu of actual receipts. That is false. The government has the right to disallow any expense that does not have an actual receipt. You might get an auditor who looks at an entry for Staples and you don't have a receipt and so they give you the benefit of the doubt that it is for a legitimate business expense. The reality is that they don't have to give you that kindness.
Always err on the side of caution with your bookkeeping and be over vigilant. The hope is that you would never have to face Revenue Canada with your books, but always be prepared as if they are coming over tomorrow.
Receipts will fade over time. This is your responsibility. Especially on big ticket purchases, photocopy the receipt. If the receipt fades, Revenue Canada may disallow the expense. Never highlight anything on a receipt. It will certainly disappear. If you want to point something out on a receipt, circle or underline it with pen or pencil.
One suggestion I have is that at the end of each period take the receipts that you have and attach them to their statements. This will enable you to go back and find the receipts easily and quickly.
These steps may require a bit of extra work on your part, but in the end they will enable you to have the kind of back up that would stand up to an audit. Go through each day with your finances with Revenue Canada in the back of your mind. When you get a receipt from a vendor, put some thought into how you handle and store it. Protect your business and protect your interests.
Have a vibrant day!
0 comments:
Post a Comment