What you should do now
May 28, 2024
4 min read
An audit is a scary thing. The idea of government officials pouring over internal company records, micro-searching for financial incongruencies is enough to keep any business owner up at night. Fingers crossed it never happens to you. But sometimes it does…
According to the Canada Revenue Agency (CRA) website, during an audit, officers “closely examine books and records of small and medium-sized businesses to make sure they fulfill their obligations, apply tax laws correctly, and receive any amounts to which they are entitled.” An audit is a stressful process, often involving accountants, lawyers and frantic searches through old records. Ultimately, the goal of any audited party is to resolve the matter quickly and painlessly.
But quickly solving the problem requires corporate records to have been safely stored and updated accordingly. Naturally, the larger and busier a company, the easier it is to push these seemingly minute priorities down the list. Big mistake.
The CRA may ask to see the following records:
- information available to the CRA (such as tax returns previously filed, credit bureau searches, or property database information);
- your business records** (such as ledgers, journals, invoices, receipts, contracts, and bank statements);
- your personal records (such as bank statements, mortgage documents, and credit card statements);
- the personal or business records of other individuals or entities not being audited (for example, a spouse, family members, corporations, partnerships, or a trust); and
- adjustments made by your bookkeeper or accountant to arrive at income for tax purposes.
Corporate record books, commonly referred to as “minute books,” contain pertinent information as it relates to the status and well-being of the company. More often than not, minute books are physical binders that sit idly on law firm shelves. The binders contain the articles of incorporation, amendments, by-laws, original copies of share certificates share certificates, corporate ledgers, and other nondescript records.
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The minute book should be updated as necessary, but at the very least once a year. What often happens, however, is that because minute books rarely need immediate updating, they are pervasively out of date.
Certain company resolutions can include the authorization to issue bonuses or dividends to employees or shareholders. For obvious reasons, this is of interest to the CRA. Dividends and income are taxed at different rates. So if an individual declares a dividend payment on their personal taxes, yet the resolution authorizing the corporate dividend payment is missing (because the minute book was not updated), the CRA may issue a tax reassessment.
The truth is that while law firms may charge a nominal amount to regularly update a company’s minute book, it costs thousands less than what a law firm will charge to overhaul and update a minute book in the case CRA audit. To avoid problems later on, here are a few important steps companies can take to alleviate the minute book concern before the Canada Revenue Agency comes calling:
- Make sure you know the location of your minute book. The vast majority of all corporate minute books are kept at the office of the company’s law firm. If it’s not there, try and locate it quickly.
- Ask your law firm whether the minute book is up to date. If necessary, remind them of recent transactions, issued dividends and other corporate matters.
- If possible, use a digital or virtual minute book. Minute books are kept in physical format for no other reason than that’s how they have been traditionally stored. A virtual minute book (whether a scanned version of a physical binder or a series of PDF documents stored on an external server) is equally as valid as the traditional physical minute book under Canadian law. Signatures need not be in pen and ink to be legally binding. New tools allow law firms to store and update minute books on the cloud, so clients can access their up-to-date records and share them instantly. Ensure your law firm uses these new solutions for your minute books.
The truth is that no one plans to be audited by the CRA. But that doesn’t mean you can’t be organized if and when the time comes. Taking a few small steps today with your minute book can bring a little sanity and clarity to an otherwise hectic ordeal.
Jul 5, 2023
3 min read
As the legal industry evolves, client relationships with paraprofessionals are becoming increasingly important. In this blog post, we will explore how client relationships with paraprofessionals are evolving and the expectations clients have when working with paraprofessionals. Key points include the increasing role of paraprofessionals in in-house legal departments, the importance of being able to work effectively with paraprofessionals on both sides, and the inclusion of paraprofessionals in client service teams.
Here’s a summary of what we’ll cover in this post:
- The role of paraprofessionals in in-house legal departments is increasing
- The ability to work effectively with paraprofessionals on both sides is important
- Paraprofessionals are being included in client service teams
Client relationships with paraprofessionals are evolving as the legal industry changes. As Karen Tuscak, owner of Spider Silk Solutions, explains, “I think it started early on, It was around 20 years ago when I was working in house and I would send out a request to the law firm and the law firm would send it back to the general counsel and I would send out, and it was indicative that lawyers and law firms thought they needed to always deal with the general counsel at in-house departments.”
As in-house legal departments are increasingly staffing themselves with paraprofessionals, lawyers at law firms need to adapt to taking instructions from paraprofessionessionals as well. Karen notes, “Our general counsel said, look, Karen decides where the work’s going, so unless you correspond with her, you’re not getting the work. And I think that’s happening more and more because not only are our external clients reaching out to law clerks and paralegals at firms, but more in-house legal departments are staffing themselves with paralegals and the lawyers at the firms have to get used to the fact that they may be taking instructions from paralegals, right? Not always from a lawyer.”
The ability to work effectively with paraprofessionals on both sides is becoming increasingly important. As Karen states, “I train it both ways. Like I said, it’s one thing, delegating to them in a law firm, and it’s your E&O insurance, but it’s another thing when you have to take instructions from them as well and you really need to be good on both sides. Paraprofessionals are so detail driven and experts in the processes of what we do.”
Watch the full interview, Client Relationships with Paraprofessionals: Evolving Expectations
In addition to the increasing role of paraprofessionals in in-house legal departments, clients are also beginning to include paraprofessionals in client service teams. As Karen says, “When you look at new RFPs that are coming into law firms, they’re asking who are the paraprofessionals that are gonna be on our client services team? And that’s a real shift, right.”
In conclusion, client relationships with paraprofessionals are evolving as the legal industry changes. The increasing role of paraprofessionals in in-house legal departments and the inclusion of paraprofessionals in client service teams are changing the expectations clients have when working with paraprofessionals. Lawyers at law firms need to adapt to working effectively with paraprofessionals on both sides in order to meet these changing expectations.
Jun 28, 2023
3 min read
Influencing change in law firms can be a challenging task, particularly when it comes to the adoption of new technology. In this blog post, we will explore the role of paraprofessionals and legal professionals in driving change and ensuring successful adoption of new technology. Key points include training, the “train the trainer” approach, and involving key stakeholders in the decision-making process.
- Training is key to successful adoption of new technology
- “Train the trainer” approach involves key people within the firm learning new technology and training others
- Involving key stakeholders, such as partners, in the decision-making process can ensure support for new technology
Influencing change in a law firm can be a challenging task, particularly when it comes to the adoption of new technology. However, the role of paraprofessionals and legal professionals in driving change and ensuring successful adoption of new technology is crucial.
One strategy for influencing change is training. As Karen Anderson, Corporate Services Manager at Blakes, Cassels & Graydon LLP, explains, “the process of getting there was democratic and it mainly involved paralegals from all of our offices because the firm had an understanding that these are the folks that are using this technology going forward.”
Watch the full interview, Influencing Change in Law Firms: The Role of Paraprofessionals and Legal Professionals
Another strategy is the “train the trainer” approach, where key people within the firm learn new technology and train others. Karen explains, “key people in our firm that are learning a lot of the stuff and then training other people within the group. And it really just keeps evolving, but the driver is the paralegal use it, and lawyers can enjoy read-only access to all of these records. As can the clients.”
It is also important to involve key stakeholders, such as partners in the decision-making process. As Karen Tuschak, former National Director at Dentons and now onwner at Spider Silk Solutions, explains, “One of the things that we did at Dentons was the paralegals were definitely the drivers of the new technology and what we wanted. But we did have a partner committee as well, just so there was support at that upper level.” By involving key stakeholders in the decision-making process, it ensures that they are aware of the benefits of new technology and can support its adoption.
Involving paraprofessionals in the process of change is also a great way of getting buy-in and support from the legal team, as they are the ones that will be using the technology on a daily basis. Furthermore, having them involved in the training and the decision making process, they can be the drivers of the new technology and they can provide insight and feedback to the vendor to improve the product and make it more useful for the legal team.
In conclusion, training, the “train the trainer” approach, and involving key stakeholders in the decision-making process are crucial for influencing change and ensuring successful adoption of new technology in law firms. By involving paraprofessionals in the process, legal teams can benefit from the adoption of new technology and can provide feedback to vendors to improve the product.