Whoever prepares your business tax return needs more than a profit and loss statement. They need to trust the numbers, and they need the details only your books (and you) can give them.
The better the hand-off, the fewer emails bounce back and forth in the spring. This checklist covers what a good year-end package includes, the notes only you can provide, and the deadlines that cluster around year-end.
Start with reconciled books
Everything else depends on this. Before year-end can be wrapped up, every bank account, credit card and loan should be reconciled right through the last day of the year. If the books are months behind, that comes first: see my guide to catching up on bookkeeping.
What goes in the package
Tax preparers generally ask for the same core set of documents:
- A trial balance and general ledger as at your year-end
- A profit and loss statement and balance sheet for the year
- Bank and credit card reconciliations, including the statements for the month after year-end
- A list of who owes you money (accounts receivable) and who you owe (accounts payable) at year-end
- Equipment, vehicle and other big purchases, with the date each went into use
- Loan and line-of-credit statements
- Your payroll and GST filings for the year
- An inventory count at year-end, if you carry stock
Notes only you can give
Some things don’t show up clearly in the bank statements. Your tax preparer will ask about them, so it helps to write them down:
- Money you put into the business, or took out for yourself (owner draws or dividends)
- Personal expenses paid from the business account, or business expenses paid personally
- New loans, leases or lines of credit, and any that were paid off
- Assets you sold or disposed of during the year
- Anything unusual: a large one-off sale, an insurance claim, a dispute with a customer
Deadlines around year-end
For a business with a December 31 year-end, the main dates are:
- T4 and T4A slips: the last day of February, with employee copies by the same date
- T5018 slips (construction businesses paying subcontractors): six months after the end of the reporting period, so June 30 for a December 31 period
- GST for annual-filing sole proprietors: pay by April 30, file by June 15
- Corporations: the T2 return is due within six months of year-end, and even an inactive corporation has to file one every year. Any tax owing is due earlier, two or three months after year-end depending on the corporation, so ask whoever files it for the exact date.
A year-end timeline
For a business with a December 31 year-end, the season usually runs like this:
- December: count inventory on the last day of the year, if you carry stock, and note any big purchases you made.
- January: download December’s statements, renew your City of Lethbridge business licence, and start your T4 slips.
- February: finish reconciling the year (including January’s statements) and file T4s and T4As by the last day of the month.
- March and April: send the year-end package to your tax preparer; annual-filing sole proprietors pay any GST owing by April 30.
- June: annual GST returns for sole proprietors are due June 15, corporations’ T2 returns are due within six months of year-end, and T5018 slips are due June 30.
Common year-end surprises
These are the things that slow down a year-end most often:
- Transactions still sitting in “uncategorized” from months ago
- A loan or line of credit that was never reconciled
- Equipment bought during the year and recorded as an ordinary expense
- Personal spending on the business card with no notes
- Payroll or GST filings that don’t match what’s in the books
In Lethbridge, add your licence
City of Lethbridge business licences run January 1 to December 31, so the start of the year is a natural time to renew your licence, wrap up last year’s books and get your T4s out, all in the same few weeks.
Keep it all
Once the year is filed, keep the package and the records behind it. The CRA generally expects business records to be kept for six years after the end of the tax year they relate to, and records of long-term property and share registers indefinitely.
Want the package prepared for you? My year-end bookkeeping service closes the year, reconciles it through the last day, and hands everything to your tax preparer in one organized package.