--- title: "CRA Review Readiness: Keeping Your Professional Corporation Books in Order" description: Prepare your professional corporation for a CRA review with confidence. Learn essential tips for meticulous record-keeping, separating funds, optimizing pay, and using tech, from an accountant near me in Langley, BC. image: https://www.cmcfo.cpa/hubfs/Gemini_Generated_Image_s73s36s73s36s73s.png --- [Skip to content](https://www.cmcfo.cpa/blog/cra-review-readiness-keeping-your-professional-corporation-books-in-order#main-content) Call: 778-735-1989 # Mitchler Tax & Advisory ## Corporate Year-End  |  Tax Planning  |  Advisory - [Home](https://www.cmcfo.cpa/) - [About us](https://www.cmcfo.cpa/about) - [Blog](https://www.cmcfo.cpa/blog) - [Resources](https://www.cmcfo.cpa/resources) Open main navigation Close main navigation - [Home](https://www.cmcfo.cpa/) - [About us](https://www.cmcfo.cpa/about) - [Blog](https://www.cmcfo.cpa/blog) - [Resources](https://www.cmcfo.cpa/resources) - [Contact us](https://www.cmcfo.cpa/contactus) [Contact us](https://www.cmcfo.cpa/contactus) July 7, 2025 at 8:16 PM # CRA Review Readiness: Keeping Your Professional Corporation Books in Order [Przemek Cerazy](https://www.cmcfo.cpa/blog/author/przemek-cerazy) Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://www.cmcfo.cpa/blog/cra-review-readiness-keeping-your-professional-corporation-books-in-order) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://www.cmcfo.cpa/blog/cra-review-readiness-keeping-your-professional-corporation-books-in-order) [Twitter icon](https://twitter.com/intent/tweet?url=https://www.cmcfo.cpa/blog/cra-review-readiness-keeping-your-professional-corporation-books-in-order) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://www.cmcfo.cpa/blog/cra-review-readiness-keeping-your-professional-corporation-books-in-order) [envelope icon](mailto:?body=https://www.cmcfo.cpa/blog/cra-review-readiness-keeping-your-professional-corporation-books-in-order) As a principal at Cerazy Mitchler Corporation, a Chartered Professional Accountants firm in Langley, BC, I often work with professionals – doctors, lawyers, engineers, and other consultants – who operate through professional corporations. While incorporating offers significant tax advantages and liability protection, it also comes with increased scrutiny from the Canada Revenue Agency (CRA). A CRA review or audit can be a stressful and time-consuming experience if your books aren't in impeccable order. The key to navigating a CRA review with confidence is **proactive preparation**. It's not about hiding anything; it's about having clear, verifiable documentation to support every transaction. Here are specific things your professional corporation should do to ensure CRA review readiness: ---   ### 1. Meticulous Record Keeping – Beyond the Basics   This might sound obvious, but for professional corporations, "meticulous" means more than just keeping receipts. - **Detailed Expense Tracking:** Every expense must have a clear business purpose and supporting documentation. For example, if you claim home office expenses, ensure you have a dedicated workspace, calculate a reasonable proportion of household expenses (rent/mortgage, utilities, insurance), and keep all original bills. Meals and entertainment expenses often trigger reviews; ensure you note the "who, what, when, where, and why" for each instance. - **Mileage Logs:** If you use your personal vehicle for business, a detailed mileage log is essential. This should include dates, destinations, purpose of travel, and kilometers for *each* trip. Google Maps data can supplement, but a log is primary. - **Bank and Credit Card Statements:** Reconcile your bank and credit card statements regularly to your accounting software. Discrepancies are a major red flag for CRA. - **Contracts and Engagement Letters:** For services provided, retain all client contracts, engagement letters, and invoices. These prove the legitimacy of your revenue. - **Payroll Records:** If your professional corporation pays you or other employees a salary, ensure all payroll records, T4s, remittances (CPP, EI, tax), and pay stubs are accurate and readily available. ---   ### 2. Clear Distinction Between Personal and Corporate Funds   One of the most common pitfalls for professional corporations under review is the blurring of lines between personal and corporate finances. - **Separate Bank Accounts:** This is non-negotiable. Your professional corporation *must* have its own dedicated bank accounts and credit cards, distinct from your personal ones. - **Avoid Personal Expenses from Corporate Accounts:** Do not pay for personal groceries, holidays, or private vehicle fuel directly from the corporate account. If you need funds for personal use, take a salary, dividend, or loan (ensuring it's properly documented and repaid according to CRA rules). - **Shareholder Loans:** If you advance money to or from the corporation as a shareholder loan, ensure these are properly documented with a loan agreement, clear repayment terms, and regular reconciliation. Undocumented or unrepaid shareholder loans can be reclassified as taxable income by the CRA. ---   ### 3. Proper Salary vs. Dividend Strategy & Documentation   The decision of how to remunerate yourself (salary, dividends, or a mix) is a cornerstone of tax planning for professional corporations. Ensure it's executed correctly. - **Directors' Resolutions:** Document all dividend declarations with formal directors' resolutions. - **T4/T4A Slips:** If paying a salary, ensure T4s are issued correctly and on time. If paying eligible dividends, T5 slips must be issued. - **Reasonableness:** While CRA generally allows flexibility, ensure the overall compensation structure is reasonable given the services provided and the corporation's income. ---   ### 4. Robust Accounting Software & Systems   Gone are the days of shoebox accounting. Modern professional corporations need robust accounting software. - **Cloud-Based Solutions:** Consider cloud-based solutions like QuickBooks Online or Xero. They offer real-time data, automated bank feeds, and easy collaboration with your **accountant near me**. This means your books are always up-to-date and accessible. - **Regular Reconciliation:** Beyond bank statements, reconcile all balance sheet accounts (e.g., accounts receivable, accounts payable, shareholder loan) monthly or quarterly. - **Organized Digital Files:** Even in a paperless environment, digital files need to be organized systematically. Create clear folders for expenses, invoices, payroll, contracts, and other supporting documentation, mirroring your accounting categories. ---   ### 5. Regular Communication with Your CPA   Your Certified Professional Accountant is your primary defense line against CRA reviews. - **Annual Review:** Don't just hand over a box of receipts at year-end. Schedule regular check-ins to discuss your financial performance, potential tax planning strategies, and any unusual transactions. - **Ask Questions:** If you're unsure if an expense is deductible or how to classify a transaction, ask your CPA *before* you record it. Proactive questions save significant headaches later. - **Industry Expertise:** Ensure your CPA has specific experience with professional corporations in British Columbia and understands the unique aspects of your profession (e.g., block fees for lawyers, overhead for medical clinics). --- By proactively implementing these practices, your professional corporation won't just be *ready* for a CRA review; you'll be running a more efficient, compliant, and ultimately, more successful business. Don't wait for the CRA to call; get your books in order now. 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