The period from November through January is the most critical time of year for Calgary business bookkeeping. Getting organized before your fiscal year-end prevents the costly scramble in February and March, ensures you do not miss valuable tax deductions, and delivers your accountant the information they need to prepare your return efficiently.
1. Reconcile All Bank & Credit Card Accounts
Every bank account and credit card used in your business should be reconciled through the last day of your fiscal year. Reconciliation confirms that every transaction in your accounting software matches what appears on your bank statements. Unreconciled accounts hide errors, duplicate entries, and missing transactions that distort your financial statements and affect your tax return. This is the foundation of clean year-end books.
2. Review Accounts Receivable
Run your aged accounts receivable report and review every outstanding invoice. Collect any overdue amounts before year-end if possible, as revenue collected before December 31 is reported in the current year. Write off any genuinely uncollectible accounts before year-end. Calgary businesses on the accrual basis of accounting can deduct bad debts written off in the year they become uncollectible.
3. Review Accounts Payable
Similarly, review all outstanding vendor invoices. For accrual-basis businesses, expenses incurred before year-end are deductible in the current year even if not yet paid. Ensure all received invoices are entered in your accounting software before December 31, even if payment is made in January.
4. Inventory Count (for Product Businesses)
If your Calgary business sells physical products, conduct a physical inventory count on or near December 31. Your year-end inventory value directly affects your cost of goods sold and therefore your taxable income. An accurate inventory count ensures you are not overpaying or underpaying tax on your product business results.
5. Review Capital Asset Additions
Compile a list of all capital assets (equipment, vehicles, computers, furniture, leasehold improvements) purchased during the year. Your CPA needs this information to calculate Capital Cost Allowance (CCA), the tax deduction for the cost of depreciable assets. Also note any assets that were sold or disposed of during the year, as this triggers a calculation of recaptured CCA or terminal loss.
6. Confirm Outstanding Loans & Balances
Obtain year-end statements for all business loans, lines of credit, mortgages on business properties, and vehicle financing. Your accountant needs the exact outstanding balance and interest paid during the year. Interest on business loans is deductible; principal repayment is not.
7. Verify Payroll Reconciliation
For Calgary businesses with employees, confirm that total payroll costs, source deductions remitted, CPP, EI, and income tax withheld reconcile to your payroll records for the year. Your bookkeeper or payroll processor should provide a payroll summary. This information feeds directly into your corporate tax return and T4 preparation.
8. Review GST/HST Records
Ensure all GST/HST returns for the year have been filed and paid. Reconcile your GST/HST account balance to your accounting records. If your last reporting period of the year is December 31, make sure that return is prepared and filed by the due date (January 31 for monthly filers, January 30 for quarterly filers).
9. Consider Year-End Tax Planning Moves
Before December 31 closes, there are often last-minute tax planning moves that can reduce your current year's tax liability. These may include: making RRSP contributions (if planning a salary payment), accelerating or deferring income, paying deductible expenses before year-end, making capital asset purchases to claim CCA in the current year, or declaring a bonus or dividend. The key: these actions must be completed before December 31. Once the year ends, the opportunity is lost. If you have not yet spoken with a Calgary CPA about year-end planning, do so immediately.
10. Organize Your Document Package for Your Accountant
The faster you deliver organized information to your CPA, the faster your return is filed. Prepare a package that includes: year-end bank and credit card statements, a list of capital asset additions and dispositions, details of any new loans or loan payoffs, owner loan account transactions, copies of leases, contracts, or major agreements entered this year, and any other changes to the business. Organized clients receive faster turnaround and lower accounting fees. Disorganized files take significantly longer to sort through and that cost gets passed through.
Finsight Accounting CPA
This article was prepared by the CPA team at Finsight Accounting Professional Corporation, a licensed CPA firm based in Calgary, AB. Content is for general information purposes only and does not constitute professional tax advice. Consult a CPA for advice specific to your situation.