question about being audited
 

alright i got a call on thursday and she said im being audited, so far i have claimed taxes since 1999 she wants all my tax info for 2001,2002 what im asking is there anything i should know before i go in for my interview... i talked with my accountant he didnt say much. I have claimed everything I can think of. payed taxes each year and yet im being audited. what does an audit involve... i just turned 23 last weekend. Im in canada with servers in the usa... Am i supposed to be paying GST? should i get a lawyer im really nervious about the whole thing they want to find every single penny to my name... one of the accountants said it was because 1 year i made 7 digits the next year i was down to half that amount and they want to know if i was skimming.. im sure a usual aduit does not involve adult sites.. let me know if you have any tips info or really what is an audit..

Thanks
- nervous webmaster:(

Don't worry about it so much, the first interview (there will be 2-3 more) is basically intended to find out what your business does, your operations, your banking, etc... The second one is where they want to review receipts, invoices, sales, etc... This meeting should be done with your accountant present. Best thing to do is to answer all the auditors questions that relate to your business and divert the accounting questions to your accountant. Make sure you don't volunteer additional information.

The biggest thing you need to be careful of how you phrase is the GST issue. If you're a webmaster (not a paysite owner), then its important they know you do not own the sites and you are working on commission with US based companies. This is pretty important or they're gonna try to nail you 7% GST of all your sales. If you're a paysite owner, you need to find out what percentage of your surfers are Canadian. If you don't have this, CCRA will assume 100% and you're royally screwed.

Any other questions, feel free to hit me up, I'm going through the same thing right now and still fighting it.

WG

don't use a regular accountant - get a real tax person or tax attorney, meet with them in advance, and take them with you to the audit.

Also i got that package in the mail about a month ago from ACACIA asking that i pay licence for my live video feeds. Should i hold off and wait till it settles down should i be suckered into paying these guys before i end up in court.

Anyone from the canada area have any good lawyers id like the info please.

As far as the audit goes, do i have to have recipts for my server bills...i dont have any sort of recipts. what about the guy at bannermasterinc.com who ripped me off for my site design... right after getting my money he took off, ynotmasters.com contacted me also looking for him. all his phone numbers no longer work. no recipts to prove i payed him... Im stressing out hardcore over this whole ordeal and after its done i think i quit the adult industry to many scammers and to much stress involved with running these sites. what do auditors look for.. what should i know before i head in she wants a phone interview and an live interview. next week.

Yes im a paysite owner, my accountant said i do not need to claim GST really there is no way to figure this out unless i go through every single signup on ibill, i checked there is over 89,000 transactions how in the world would we figure this out?

i wish i would have went offshore like 90% of the other companies out there.

There are many cases that the government has won against pay site owners. The general rule is (I asked the auditor about this), is if you own a member based site, you need to know what percentage of them are Canadian. If you don't know this, the CCRA will assume 100% and they will want 7% of all your sales.

From the 89,000 transactions you have, try to see if you can get their IP addresses. Pay ibill if you have to do get these IP addresses and do a geographical lookup on each one to figure out what percentage of your surfers are canadian. Believe me, this sounds like a shitload of work to do on 89k transactions but imagine paying 7% of all your sales in GST plus interest on it. On top of this, you may have to pay a penalty but its unlikely.

I realize this seems bad but I would strongly suggest getting a tax attorney since the government does have precedence on winning against paysite owners.

A credit card statement is sometimes enough for an invoice since they can get the details from Visa/Mastercard. If you were ripped off by a designer, you should have written it off as bad debt.

I hope this helps.
WG

Run as fast as you can, cause your fucked...

Absolutely

:thumbsup