Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question: How could Emily keep up with the government regulations to ensure she remained in compliance? a. Who could help her with this? Case Study

image text in transcribed
image text in transcribedQuestion: How could Emily keep up with the government regulations to ensure she remained in compliance?

a. Who could help her with this?

Case Study - Emily Jones Emily Jones was very upset and felt she was being picked on by the government. She was worried she was being targeted and her business would suffer. Sure, she was not familiar with all the regulations, and therefore may have not complied with everything she should have. She was furious that this situation may put her out of business. Five years ago, Emily started her own cleaning business. She provided customers with proper invoices and was well regarded for her services. Emily had a lawyer set up her business as a Corporation (Clean Sweep Inc.) so that she would sound professional. She was fully insured and had never had any problems. It was a slow start, but business picked up quickly and within the first year, Emily had to hire two additional employees to keep up with the demand. A friend had advised Emily, that instead of hiring the cleaners as employees, she should hire them as subcontractors and avoid a lot of additional paperwork and headaches. The new employees used all of Emily's equipment and supplies, but they had their own vehicles to travel from client to client. Emily also advised she would pay them a flat rate for each job they did, and they would cover their own transportation costs. Each would also have to file their own tax returns. The business continued to grow with Emily's excellent reputation, and she found herself working constantly to schedule appointments and still try to do some of the cleaning herself. Emily's workers seemed happy, rarely complained and everyone got a long well. Because of the busy schedule, Emily knew she had not kept on top of her accounting, and she was getting consistent reminders about unfiled personal and corporate tax returns. As Emily was making a lot of money, and had little time to spend it, she figured she would have enough to cover whatever she may have owed to the government. Emily finally got around to seeing an accountant to help her through filing her taxes. She thought "better late than neverl" but was disappointed to find out that the Canadian Revenue Agency was not able to process her tax return because the corporation had been dissolved due to her failure to send in her corporate tax returns. Additionally, the Canadian Revenue Agency was threatening legal action over the unpaid taxes. The accountant also advised Emily that there would be a lot of paperwork and it would take time to get her corporation reinstated. Furthermore, the accountant had advised Emily she should have been charging her customers HST. Emily explained she thought that was just for retail stores, but the accountant let her know that she was also responsible to pay 13% of all the revenue she had made in HST immediately. However, the HST could not be filed or paid because the corporation had been dissolved. The following week things got worse. Emily was contacted by the Provincial Labour Board and was accused of paying one of her cleaners less than minimum wage; after time spent on the job and the transportation costs were calculated. Additionally, the other cleaner was not paying their taxes. It was explained to Emily, despite any contract they may have had, these were actually employees and she should have been deducting income tax, CPP and El contributions which Emily will now be responsible for paying. She also may be fined for these infractions

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions