Mon Jan 5
As the fiscal year comes to a close, Canadian businesses must ensure their financial records are accurate, complete, and compliant with Canada Revenue Agency (CRA) requirements. Proper year-end preparation not only helps avoid penalties but also provides valuable insights for better financial planning in the year ahead. Below is a practical year-end financial checklist every Canadian business should follow.
Start by reconciling all bank accounts, credit cards, and loan statements with your accounting records. Ensure all transactions are properly recorded and categorized. This step helps identify missing entries, errors, or duplicate transactions that could affect your financial statements.
Confirm that all income has been reported and all business expenses are properly documented. Gather receipts, invoices, and contracts to support your claims. Accurate expense tracking ensures you maximize eligible deductions while remaining compliant with CRA regulations.
Evaluate outstanding customer invoices and follow up on overdue payments before year-end. At the same time, review unpaid bills and confirm they are recorded correctly. This provides a clear picture of your cash flow and helps improve financial planning.
If your business holds inventory, conduct a physical count and compare it with your records. Adjust for damaged, obsolete, or unsellable items. Review fixed assets such as equipment, vehicles, and furniture, and ensure depreciation (capital cost allowance) is calculated accurately.
Ensure all payroll records are up to date, including salaries, bonuses, commissions, and taxable benefits. Confirm CPP, EI, and income tax deductions are accurate. Begin preparing for T4 and T5 slips, which must be filed with the CRA by the required deadlines.
Reconcile your GST/HST collected and paid throughout the year. Make sure all filings are complete and accurate. If your business operates in multiple provinces, review PST or QST obligations to ensure compliance.
Discuss tax-saving opportunities with your accountant before year-end. This may include deferring income, accelerating expenses, declaring bonuses, or contributing to RRSPs or IPPs. Strategic planning can significantly reduce your overall tax burden.
Finalize your income statement, balance sheet, and cash flow statement. These reports are essential for tax filing, securing financing, and evaluating business performance. Accurate financial statements also support better decision-making.
Use year-end financial data to set realistic budgets and goals for the next fiscal year. Identify trends, strengths, and areas for improvement to help your business grow.
A thorough year-end financial review helps Canadian businesses stay compliant, minimize taxes, and plan confidently for the future. Working with a professional accounting firm ensures accuracy, efficiency, and peace of mind during this critical time.
