Does this sound familiar? It’s year-end and you’re searching for missing receipts, answering questions about old transactions and trying to remember something that happened 6 months ago.
When you’re running a business, it’s easy for paperwork to get behind when there are other pressing priorities. But preparing for year-end becomes easier when you have a system in place. That includes knowing what your accountant needs from you in advance so you have time to collect all of it.
We’ve come up with a year-end checklist to help you systematically get everything in order.
1. Confirm Year-End Date and Deadlines
First things first. Ask your accountant about the time period that they will be reviewing. A corporation’s fiscal year-end does not necessarily fall on December 31. Make sure your records cover the correct dates, especially if this is your first year in business or your company’s reporting period has changed.
Keep deadlines for filing and payments separate. A corporation’s T2 income tax return is generally due within 6 months of the year-end date; however, the balance of tax can be due earlier. CRA’s corporate filing and payment guidance.
Be sure to ask your accountant to confirm the deadlines that apply to your business, including any provincial requirements. Agree on when the bookkeeping and supporting documents should be ready. That gives everyone a practical schedule to work with.
2. Reconcile Bank, Credit Card and Loan Amounts
Download the statements for every business bank account, credit card, loan and line of credit. Then check that the balances in your bookkeeping agree with the statements, allowing for legitimate timing differences such as outstanding payments.
Are there transactions that need an explanation such as:
- Transfers recorded as income or expenses
- Duplicate entries
- Missing bank charges or interest
- Payments assigned to the wrong account
- Deposits that have not been matched to customer invoices
Also, if you process payments through a POS, there could be fees that might need to be accounted for. Flag any differences for your accountant to review.
3. Organize Receipts and Supporting Expense Documents
A transaction in your accounting software should have enough supporting information to explain what it was for. Take the time to gather purchase invoices, bills, receipts and expense claims. Add a short explanation in case the purpose is unclear, especially for transactions that someone who is not in the business might struggle to understand.
For GST/HST registrants, supporting documents must contain accurate information for input tax credit claims. A payment appearing on a bank statement does not automatically provide all that information. Check out CRA’s GST/HST documentation guidance for more details.
Keep documents readable and easy to match to the bookkeeping. Before uploading a large batch, check if they have already been captured through any type of receipt software. If documents are missing, make a list and request replacements while there is time (before the tax submission date).
4. Review Outstanding Customer Invoices and Supplier Bills
By running an accounts receivable report, you can identify unpaid customer invoices. An accounts payable report will show you the unpaid supplier bills. Check whether those balances reflect what is actually outstanding.
For customer invoices, identify disputed amounts, payments that have not been matched and any accounts where collection has become uncertain. Give your accountant the background rather than just deleting an old invoice.
For supplier bills, look for duplicates, missing credits and expenses that have not yet reached the bookkeeper.
Pay particular attention to the paid vs. issued dates for invoices near year-end. For example, a supplier invoice received in January might relate to work completed in December. In this case, provide the dates to your accountant so they can determine the best way to document the amount.
5. Document Inventory and Work in Progress
If your business holds inventory, prepare a record of what is on hand at year-end. Include quantities, supporting costs and notes about damaged, obsolete or slow-moving items. Agree with your accountant on how the count should be completed and how the inventory should be valued. The value assigned to year-end inventory affects reported income. Refer to CRA’s inventory guidance for more details.
For project-based jobs, prepare a separate list of unfinished work that is unbilled.
If you have a construction business, you might need to explain project progress, costs incurred, invoices issued and customer deposits. But a professional services business might need to identify work completed but not yet billed. The accounting depends on the circumstances. Your role is to provide enough detail to your accountant so they can assess it properly.
6. List Equipment Purchases, Sales and Financing
Do you have assets for the business? Prepare a list of what’s been purchased or disposed of over the year. This can include: vehicle(s), computers, machinery, furniture or improvements to your business premises.
For each transaction, gather the purchase / sale document(s), any financing agreements and relevant dates. You will need to explain whether an asset was traded in, sold, financed or used partly for personal purposes.
Don’t assume every equipment purchase should be recorded as an ordinary operating expense. Capital assets may be subject to capital cost allowance rules, with the deduction depending on the asset and applicable requirements. A good resource for this is CRA’s capital cost allowance guidance.
7. Check Payroll, GST/HST and Tax Account Records
Gather any payroll reports, GST/HST returns, remittance confirmations and relevant notices of assessment or correspondence. Then compare the records with the balances shown in your bookkeeping. Flag differences, outstanding amounts or payments that may have been applied to the wrong period.
Payroll also has its own reporting calendar. T4 slips report remuneration paid during a calendar year, which may differ from your corporation’s fiscal year. You can review CRA’s T4 guidance to get more information about this.
Finally, confirm who is responsible for preparing information slips, reviewing remittances and resolving discrepancies. If you have received a notice or request from CRA, include it in the year-end package for your accountant. They need to know about outstanding questions as well as completed filings.
8. Explain Owner Transactions and Significant Business Changes
There could be some transactions that need more context than just a date and an amount. Prepare details of money that you as an owner contributed or withdrew from the business, business expenses paid personally and personal expenses paid through the business account.
For corporations, these transactions might affect shareholder accounts. Provide an explanation for what happened and any supporting documents so your accountant can determine how to treat them.
Don’t forget to highlight significant changes through the year, such as:
- New shareholders or changes in ownership
- New loans or financing arrangements
- Grants or other funding received
- Major contracts, acquisitions or changes in operations
Finish with a short list of unresolved questions.
Bonus Point: Make Year-End Preparation a Regular Habit
You do not have to complete all 8 points above in one sitting. Assign responsibility for each area and agree on a document sharing process with your accountant. Keep a list of missing items so you can see what still needs attention.
If the same problems occur every year, review the process behind them. Missing receipts may call for an easier way to capture them. Unexplained balances may point to overdue reconciliations. Supplier bills arriving late may require clearer responsibility within the team.
Crescendo’s Calgary bookkeeping services include all you need: reconciliations, accounts payable and receivable support and year-end statement preparation. Regular bookkeeping gives year-end preparation a much stronger starting point.
Schedule a Consultation
Year-end preparation is easier when your records are organized, and you know what needs attention. At Crescendo Accounting, we help businesses connect ongoing bookkeeping with year-end financial reporting and tax preparation.
Schedule a consultation with Crescendo Accounting.
Frequently Asked Questions
When should I start preparing for year-end?
Start several weeks before your fiscal year-end. This gives you time to gather necessary documents, answer any outstanding questions and discuss decisions that may need attention before the year closes. Agree on the schedule with your accountant.
Are bank statements enough to support business expenses?
Keep invoices, receipts and other supporting documents to go with your statements. A bank statement may show that a payment occurred but there likely isn’t an explanation of what was purchased or whether tax was included.
How long should Canadian businesses keep accounting records?
The CRA generally requires records to be kept for 6 years from the end of the last tax year they relate to. Confirm this requirement before disposing of them. Here is where to find out more: CRA’s recordkeeping guidance.
What if my bookkeeping is behind?
That’s OK. Just tell your accountant early. Identify the last completed reconciliation, gather any missing statements and documents, and agree on how to catch up. Making the gap visible means everyone has a clearer starting point.