Year-End Bookkeeping Checklist for Small Businesses

A clean year-end close makes tax filing faster, reduces the risk of a CRA review, and gives you an accurate picture of how your business actually performed. This year-end bookkeeping checklist covers everything Toronto and GTA small businesses should complete before their books are considered closed for the year. At Torontax, we help clients work through this checklist every December and January.

Steps 1–10 apply to most small businesses. If your business is a corporation, you also have corporate year-end tasks; see Extra year-end items for incorporated businesses below. Sole proprietors report business income on Form T2125 with their personal return, so those items do not apply.

1. Reconcile All Bank and Credit Card Accounts

Every business bank account and credit card used for the business should be reconciled to its year-end statement, with every transaction matched and any discrepancies investigated and resolved. Unreconciled accounts are one of the most common reasons a bookkeeping file needs costly cleanup before a tax return can be filed.

2. Reconcile GST/HST Collected and Remitted

Compare the total GST/HST you’ve collected and remitted throughout the year against what your bookkeeping records show. Mismatches here often indicate a missed sale, a duplicated entry, or an input tax credit that was claimed incorrectly, and they’re much easier to fix in December than after you’ve already filed a GST/HST return based on incorrect numbers.

3. Review Accounts Receivable and Write Off Bad Debts

Go through outstanding invoices and identify any that are genuinely uncollectible. Bad debts that meet CRA’s criteria can be written off and deducted, but only if they were previously included in income and you can demonstrate the debt is actually uncollectible.

4. Review Accounts Payable and Accrue Outstanding Expenses

Make sure all expenses incurred during the year — even if the invoice hasn’t been paid yet — are recorded in the correct period. This ensures your year-end financial statements reflect the true cost of running the business for the year, not just what happened to be paid by December 31.

5. Reconcile Payroll Records and Prepare T4s

If you have employees, reconcile total payroll paid during the year against your payroll remittances to the CRA. Employers must issue T4 slips to employees and file the T4 information return with the CRA by the last day of February following the calendar year — missing this deadline results in penalties, so payroll reconciliation should be one of the first items completed in January. (Source: CRA – When to file information returns)

6. Count and Value Inventory

If your business carries inventory, a physical count at year-end is necessary to accurately value cost of goods sold and closing inventory on your financial statements. Inventory discrepancies between your books and a physical count should be investigated and adjusted.

7. Review Fixed Assets and Capital Cost Allowance

List all equipment, vehicles, and property purchased during the year, and confirm they’re properly categorized for Capital Cost Allowance (CCA) purposes. Assets sold or disposed of during the year should also be removed from your asset register with any resulting gain or loss recorded. If your business is a corporation, see our corporate tax services page. If you are a sole proprietor or self-employed, see our self-employed tax services page.

8. Organize Supporting Documents for Six Years

The CRA requires businesses to keep supporting records — receipts, invoices, contracts, bank statements — for six years from the end of the last tax year they relate to. Year-end is the ideal time to organize and archive the past year’s documentation, whether digitally or on paper, so it’s ready if the CRA ever requests it. If a return is filed late, the six years run from the date it was filed. (Source: CRA – Where to keep your records, for how long and how to request permission to destroy them early)

9. Prepare Year-End Financial Statements

As the next step in your year-end bookkeeping checklist, once reconciliations are complete, your bookkeeper or accountant should prepare a year-end income statement and balance sheet. These statements form the basis for your corporate or personal tax return and give you a clear picture of profitability for the year.

10. Meet With Your Accountant Before Filing

Before your return is filed, and as the final item on your year-end bookkeeping checklist, review your year-end financials with your accountant to identify any last-minute tax planning opportunities — such as RRSP contributions or timing of expenses — that are still available before your filing deadline.

Extra year-end items for incorporated businesses

• Record all transactions between the corporation and its shareholders for the year.
• Confirm the list of shareholders and any ownership changes. This information is needed for the T2 shareholder schedule; see our T2 corporate income tax return guide.
• Prepare financial statements that can be converted into GIFI format for the T2. (Source: CRA – General Index of Financial Information (GIFI))
• Note the balance-due day, 2 months after year-end (3 for qualifying CCPCs), which is earlier than the filing deadline. (Source: CRA – Balance-due day)
• Note the T2 filing deadline, within 6 months of year-end. (Source: CRA – When to file your corporation income tax return)
• Note the Ontario annual return, filed through the Ontario Business Registry within 6 months of fiscal year-end. (Source: Ontario Business Registry – annual return filing)
• Keep share registers and property records beyond the usual six years. (Source: CRA – Where to keep your records, for how long and how to request permission to destroy them early)

Free downloadable template for corporations. The Corporate T2 Year-End Records Tracker (XLSX) is a spreadsheet for tracking which year-end records your corporation has gathered before its T2 is prepared. Download the Corporate T2 Year-End Records Tracker (XLSX). No email address required.

This template helps organize records. It does not determine eligibility, deductions, tax owing, or filing requirements.

Get Help With Your Year-End Bookkeeping Checklist

Working through a full year-end bookkeeping checklist on your own is time-consuming and easy to get wrong. We handle reconciliations, T4 preparation, and year-end financial statements for small businesses across Toronto, Scarborough, Mississauga, North York, Etobicoke, Brampton, Markham, Vaughan, and Richmond Hill, and because we also prepare corporate tax returns, your books flow smoothly into your tax filing (bookkeeping and financial statements are charged separately from the corporate return).

Contact us at (437) 410-7999 or use our remote tax filing service. For official CRA record-keeping requirements, visit Canada.ca — Keeping Records.

Do not email banking credentials or passwords. For SINs, employee tax information, and full tax slips, contact us first for instructions on the safest way to send documents.

Running a small business? See our small business accounting packages.