CRA Small-Business Audit — Montreal CPA Firm Near You: Cash, COGS, Draws Under Control

A CRA Small-Business Audit is one of the most common yet challenging reviews faced by entrepreneurs, sole proprietors, and corporations. The Canada Revenue Agency (CRA) and Revenue Québec target small businesses because they rely on self-reported income and expenses, often in cash-heavy industries. Mackisen CPA Montreal provides complete representation to help business owners defend their income, prove deductions, and avoid harsh penalties.

Legal Foundation

Law: Income Tax Act s.231.1 — authorizes CRA to inspect books, records, and accounts to verify declared income.
Jurisprudence: Fortino v. The Queen (1997 TCC) — confirms that the taxpayer bears the burden of proving expenses and declared income once CRA issues an assessment.

Why You Need a CPA for a Small-Business Audit

Small-business owners are often experts in their trade—but not in tax law. CRA auditors use ratio testing and indirect verification methods (like bank deposits, purchases, and markups) to determine if sales and expenses are reasonable. Without a CPA, it’s easy to lose legitimate deductions or misrepresent business income unintentionally.

Mackisen CPA Montreal prepares detailed reconciliations, accounting explanations, and financial proofs that speak the CRA’s language—turning what could be an intimidating audit into a structured, factual defense.

Learning insight: In a small-business audit, every receipt tells a story. A CPA ensures that story is coherent, credible, and consistent with your declared income.

What Mackisen CPA’s Small-Business Audit Defense Includes

• Full review of financial statements, bookkeeping, and tax filings.

• Bank deposit and cash-flow analysis to verify declared sales.

• Cost of Goods Sold (COGS) verification with supplier invoices.

• Proof of owner draws, payroll, and shareholder distributions.

• Reconciliation of CRA’s ratios to industry norms.

• Representation at all CRA and Revenue Québec meetings or interviews.

Learning insight: CRA’s ratio testing doesn’t always fit reality. Mackisen CPA ensures your numbers reflect how your business truly operates—not just how the CRA expects it to.

Common Triggers for CRA Small-Business Audits

• High cash transactions or unreported e-transfers.

• Repeated business losses or thin margins.

• Inconsistencies between GST/QST returns and income-tax filings.

• Owner personal expenses recorded through the business.

• Anonymous tips or supplier verifications.

These triggers often flag small businesses in construction, retail, consulting, restaurants, and service industries. Mackisen CPA knows each sector’s audit profile and prepares your file accordingly.

How Mackisen CPA Manages the Small-Business Audit

1. Conducts an immediate audit-risk assessment and identifies sensitive areas.

2. Prepares a complete supporting binder for income, COGS, and expenses.

3. Reviews and reconciles CRA’s working papers line by line.

4. Drafts formal responses supported by tax law and accounting logic.

5. Negotiates audit closures and prevents multi-year reassessments.

Learning insight: The CRA assumes underreporting unless proven otherwise. A CPA’s documentation flips that assumption—showing that your records are transparent, accurate, and verifiable.

Benefits of Professional Representation

• Prevents CRA from overestimating sales or disallowing legitimate deductions.

• Reduces the risk of penalties or extended audits.

• Protects your business from cash-flow disruption.

• Builds a permanent audit-proof accounting system.

• Improves financial management and future compliance.

Learning insight: The best time to prepare for a CRA audit isn’t when it starts—it’s during every month you operate. A CPA-managed system keeps you compliant before, during, and after any review.

SEO Optimization and Learning Value

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Learning insight: CRA small-business audits are data-driven but business realities are human. Mackisen CPA bridges that gap by translating daily operations into legal, financial, and tax-proof narratives.

Real Client Success

• A retail store avoided a $40,000 reassessment after Mackisen CPA reconciled supplier invoices and COGS differences.

• A restaurant reduced its audit exposure by 80% when our team documented tip allocations and POS variance reports.

• A construction contractor preserved $75,000 in GST/QST input tax credits by proving supplier authenticity.

Why Mackisen CPA Montreal

Our bilingual CPA team has over 35 years of combined experience helping small businesses across Quebec survive and thrive under CRA and Revenue Québec scrutiny. We handle every aspect—from document preparation to negotiation—with professionalism, transparency, and strategy.

Learning insight: CRA sees risk; Mackisen CPA sees opportunity. Every audit becomes a chance to refine your accounting system, improve margins, and strengthen your business foundation.

Learning conclusion: CRA small-business audits can turn financial data into legal risk—but with Mackisen CPA Montreal, your numbers become your shield. Precision, documentation, and professional representation turn every audit into proof of business integrity.