A corporate year-end is much easier when the groundwork is done before the books come to your accountant. Here is what to have in order.
Reconcile everything with a balance
Every bank account, credit card, and loan should be reconciled to its closing statement at year-end. Unreconciled accounts are the single most common reason a year-end takes longer and costs more than expected.
Count what you hold
If your business carries inventory, count it at year-end and record the value. This is not something that can be reconstructed later with any confidence.
Review receivables and payables
Go through outstanding customer invoices and identify anything genuinely uncollectible, so it can be dealt with properly rather than sitting on the books indefinitely. Do the same with supplier bills, and make sure expenses incurred before year-end are recorded even if they were paid afterwards.
List capital purchases and disposals
Equipment, vehicles, computers, and similar assets bought during the year are not simply expenses. They are added to capital cost allowance classes and deducted over time. Keep the invoices, and note anything you sold, traded, or scrapped, because disposals affect the calculation too.
Sort out the shareholder loan account
Money moving between you and the corporation during the year needs to be tracked. A shareholder loan account left owing to the corporation for too long can create a taxable benefit personally. This is worth reviewing before year-end, while there is still time to act on it.
Tie out payroll and GST
Payroll records should agree with what was remitted, ready for T4s at the end of February. Your GST account should reconcile to the returns you filed. Differences found now are far easier to fix than differences found during a CRA review.
Do not forget the registry
Corporations must file an annual return with their provincial or federal registry. In Alberta this falls in the corporation’s anniversary month. It is separate from your tax return, it is easy to overlook, and missing it can eventually lead to the corporation being struck.
The dates to keep in view
The T2 return is due six months after year-end, but tax owing is generally payable earlier, within two or three months depending on your circumstances. Planning for the payment date rather than the filing date is what avoids interest.
If you would like this handled end to end, that is exactly what our corporate tax service covers. Book a consultation ahead of your year-end and we will tell you what to prepare.
A note on this article: tax rules and deadlines change. This article is general information, not advice for your specific situation - for that, talk to us.