Audit shield is an insurance cover that ensures in the event that companies are subject to a random audit, then they are covered. It is done mainly to give the accountants a peace of mind in their business. Audits are usually conducted by the governing authorities such as the Australian tax office of Australia or the Canada revenue authority for Canadians. The tax investigations are normally conducted by these bodies with a view to making certain that the businesses or companies are correctly fulfilling their tax obligations. Usually, the costs that can run very high sometimes are incurred during these tax audits, and it is the businesses that are usually obligated to take care of the costs.
Why it is encouraged
The reason why an audit shield is encouraged for most of the accounting firms is because it’s the most effective way of helping an accountant with their client in times of filing the tax. Tax investigation costs being offered by tax insurance companies are ones that are able to take care of your client’s obligations as they correspond to the official investigations, reviews and audits. You won’t have to be worried about any fee that will be incurred with this insurance.
The tax protection cover covers professional costs like the personal tax, corporate tax, employer compliance audit, goods and service tax. These are very important audits that ought to be covered so that the client would not have to worry when the investigations occur.
Choosing an insurance company
There are different insurance companies, all offering different covers. Therefore, companies ought to understand first what the cover is about before subscribing to anything. Also, understand the costs that are covered and the terms and conditions as many companies refuse to pay for something not in their conditions. One thing fundamental is to learn about the implementation of tax shield in your accounting firm as well not only for your protection but also that of the client.
Benefits to the client and accountant
The biggest benefit that the audit shield gives to the accountant and the client is the peace of mind as the audit shield will help both of them in any circumstances that may occur. Also the client will have confidence in your firm when you give them the explanation on how the tax audit is going to be beneficial to them. Also it will result in good relationship between you and the client when they have seen the benefits of the shield when it has been implemented.
With the random tax audits that authorities conduct on businesses all over the world in different countries, these can be quite detrimental to a business as the fees that are incurred by these audits, reviews and tax investigations normally are supposed to be catered for by the business itself. They can be quite costly and therefore, can bring a business to its knees, especially if it’s a startup. However, the audit cover is the best protector during these times.