One area where cloud technology can make a significant difference is with expenses and corporate tax filing. Not only is filing taxes mandatory, but it gives businesses an opportunity to recoup some costs by claiming input tax credits (ITCs) to recover Value Added Tax (VAT) paid throughout the year.
Filing correctly can maximize credits claimed, however filing incorrectly can potentially flag an organization for audit with the Canada Revenue Agency. Worse still, if a business hasn’t correctly tracked and filed all the information it needs to support its claims, an audit can be a lengthy and stressful process. If the audit uncovers mistakes, consequences can be costly and in some cases, result in criminal convictions.
Cloud-based expense reporting offers businesses many advantages that can simplify tax time. Automated solutions like Concur help businesses easily comply with tax regulations by managing employee expenses throughout the year and tracking the information needed during tax time. This helps businesses file taxes efficiently and with accuracy to avoid mistakes. Here are four ways cloud based solutions can help businesses at tax time.
Keeping track of complex VAT systems: Recovering the credits and refunds an organization is eligible for is complicated, and can leave organizations prone to costly mistakes in the process. Cloud-based expense software allows businesses to easily capture receipts and tax details and track these throughout the year. The software can also calculate tax based on gross expenditure, expediting and simplifying the process for employees.
Preventing common mistakes: Audits regularly target employee reimbursements and allowances because these are areas where companies regularly make mistakes. Businesses can recover GST spent on employee expenses, but there are certain documentation requirements organizations must meet before they can claim these as ITCs. If information is missing, organizations may choose to use prescribed simplified factors to determine ITCs. However, once an organization chooses to use the simplified factor method, it must use it for the entire fiscal year and must apply the same method consistently within each category of reimbursed expenses. Expense software can help manage this to prevent discrepancies and inconsistencies. For example, Concur will require a business to choose the method it wants to use to calculate ITCs, and the choice will be applied to all expenses for every employee.
Minimizing issues: There are different rates and factors that go into expense reports and claiming credits. A cloud-based expense management system will track all the various rates and factors, plus potential restrictions and other issues that can arise. Not only will this minimize issues, but it will help ensure issues that do come up can be addressed properly.
Set it and forget it: Once an automated system to track expenses has been set up and the parameters have been evaluated for accuracy, there is no need to re-visit the rates or calculations. The exception is if there are changes in government legislation or administration.
Traditionally complex tasks like corporate tax filing are made drastically easier by the power of cloud technology. Businesses should look for ways to embrace automation across business functions and harness the power the cloud can afford.
Kevin Craig is the Managing Director of Concur Canada.
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