What does it mean to be compliant with CRA?
The thought of being compliant with CRA may cause some initial anxiety among business owners, especially if you are behind on your taxes. This is understandable because business owners are busy managing other vital issues on a daily basis such as
- how to stay ahead of their competitors
- managing cash flow
- try to find the right product and service mix for their customers
- managing the workforce … and so and so forth.
These constant struggles drain business owners. This is especially taxing when you are trying to maximize the outcome of your strategy with limited financial and human capital. Being compliant with CRA is simple but requires consistency in reporting to them. This means that your GST/HST returns, corporate taxes, personal taxes, payroll returns, and other related items are filed and paid on time. In one of our earlier blog posts, we covered the risks of being exposed to a GST/HST audit by not being compliant with CRA’s reporting requirements.
Why is being compliant with CRA important?
We operate in a global village which presents tremendous amounts of opportunities. However, opportunities bring challenges and threats. As a business owner, you have to formulate a flexible growth strategy which results in sustainable growth. This also molds a protection shield against its competitors, economic downturns, and geopolitical instability.
We understand that entrepreneurs are busy working on their businesses. But, they can’t ignore the importance of staying compliant with the rules of the industry and country they operate in. We, at Think Accounting, advise our clients to stay compliant with CRA by keeping their books and records up to date.
We make every possible effort to ensure that our clients do not pay unnecessary penalties and interest. Your money is better in your own pocket than CRA’s, which brings creates value for you and your business.
Selling Your Business and Getting Bank Financing
At Think Accounting, we are heavily involved in helping our clients with the purchase and sale of businesses. We have come across many situations where sellers failed to maintain good records. This resulted in getting less than par for the value of their company.
The business could have been sold for a higher price if the accounting records were maintained well. We have also encountered situations where business owners were unable to secure the necessary financing at a desired interest rate. They are caught in situations where they ended up securing funding above the market interest rate. This results in higher borrowing cost, which ultimately had negative implications on their bottom line.
Business owners must adopt a long-term approach and never compromise their long-term growth for short-term gains. We operate in an economy where businesses are working on thin margins, and it is very alluring for business owners to cut corners on taxes and compliance costs, which is a wrong approach to adopt.
One audit or review by the compliance authority will eat away all that was saved by not following the proper guidelines. You will pay the costs you were supposed to pay in the first place. You will also be responsible for paying the interest and penalties for violating the required guidelines. Lastly, it will also flag your business, which means excessive monitoring of your business by the regulatory authorities.
Top 5 Benefits of staying compliant with CRA
No doubt, it is an added cost to stay in compliance and maintain your records, but it has considerable benefits that outweigh the cost. Here are the benefits that businesses can derive by staying in compliance with CRA:
- Lower borrowing cost and more access to capital.
- Lower professional fees – accounting and legal fees would be lower at the end of the year if the books are maintained and kept in order.
- Reduced audit risk – Fewer chances of CRA or other authority to audit.
- Higher selling price – You can negotiate a better price for your business by not providing an opportunity for the buyers to discover any noncompliance items during the due diligence. It will result in quick sale of your business at a higher market value.
- Smooth transition to the new buyer – Robust process helps the transition period easier. Good process and compliance can be a useful selling feature and can attract more buyers which can ultimately result in a higher selling price.
We encourage you to contact your advisors, accountants, or legal team to help you fill the gaps, if any, to ensure that you are compliant with CRA and other regulatory matters.
CRA compliance requires specialized knowledge and is better left to professionals. We’d be happy to help you navigate this maze. Reach out to one of us at firstname.lastname@example.org or call us at 905-565-0095!