Tips for Preparing Your Business for Your Corporate Year-End

As you get all your paperwork organized for tax season, here is a comprehensive list of things to consider when preparing your company’s financial information for your accountant:

• Have your bank accounts and credit cards been reconciled?
• Have you looked at your Outstanding Accounts Receivable balances?
  • Is everything collectible?
  • If not, you may want to talk to your accountant about taking a Bad Debt Expense for the uncollectible ones.
• Have you looked at your Outstanding Trade Payables?
  • Have any of these already been paid?
  • If so, when? 
    • You may have a duplicated purchase
    • Or your payment has been miscoded.
• Have you considered whether or not your company can afford to pay you and/or your employees a bonus related to your year-end results?  
  • This would be a deductible expense for the year the bonus relates to, even if it hasn’t been paid.
    • It does need to be paid out though within 180 days.  If it isn’t paid within that time frame, it won’t be a deductible expense.  
• Have you looked at your meals and entertainment expenses?
  • Are these all expenses related to business development/client maintenance?
    • In other words, are these really work-related?
    • This is one of the easiest areas for the CRA to deny expenses if they are not supportable.  
• Have you kept a mileage log of your work-related travel for the year?
  • Similar to the meals and entertainment expenses, this is an easy area for CRA to deny expenses as many business owners do not keep accurate records for their work-related travel in their vehicle.
• If you have declared Dividends in the year, don’t forget that the directors of your company need to declare the dividends.
  • There should be a director’s resolution authorizing the distribution of these dividends to the shareholders. 
• Charitable Donations made through your company
  • Are the receipts in your company’s name?  If not, you should be declaring these personally and not through the corporate return.
  • If they are made on behalf of the corporation, the donation receipt will need to be re-issued in the name of the company.
• Any taxes owing should be paid within 90 days of a corporation’s year-end (for Small Canadian Businesses)
  • So for December 31st. This means that the deadline is March 31st.  
  • Give your accountant plenty of time to come up with an estimate for you.
  • You will be assessed interest and penalties for not making an installment if the taxes owing are more than $3,000.  

Best,

Dayna Holland, CPA, CA (she/her)

CEO of Dayna Holland Ltd.

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Are you a small business owner or self-employed and wanting to improve your bookkeeping habits so that you can get ahead in 2021? Be sure to check out this blog post for my top three recommendations based on conversations I’ve had this year with entrepreneurs.

Click here to learn more about Dayna Holland, CPA, CA.