The end of the year is fast approaching. Now is the time to start preparing for your year-end bookkeeping. Getting this process started as early as possible helps to make this process, and the preparation of your tax return, less stressful and helps to ensure that you don’t miss anything. The following are general steps you would take to complete this process. Some of the steps may not be applicable to your business.
1. Get your books up-to-date
o ORGANIZE YOUR RECEIPTS
Collect all receipts for deductions you will be claiming on your tax return.
Check your personal bank statement for any business expenses that you paid using personal funds.
o RECONCILE YOUR BANK ACCOUNT
Reconciling your bank account ensures that you've recorded all transactions.
o ACCOUNTS RECEIVABLE
Ensure that you've invoiced all customers for work done.
Contact any customers who still owe you money. Are there any outstanding receivables that you are not able to collect? These should be written off as bad debt.
o ACCOUNTS PAYABLE
Ensure that all accounts payable have been recorded. Use vendor statements to check that you have all invoices recorded.
o FIXED ASSETS
Record all fixed assets acquired or disposed in the year.
Ensure that you have an accurate count of all inventory at December 31. Also, verify that inventory values are accurate. If you have any inventory that cost more than they are worth, your inventory needs to be written down. Other information that your tax preparer will need are - beginning inventory at January 1, ending inventory at December 31, cost of inventory purchased throughout the year and the amount of inventory sold during the year.
Reconcile your payroll account. Verify that it matches with what you’ve reported and remitted to the CRA.
Prepare employee T4’s as needed. The deadline is February 28, 2016
o SALES TAX
Reconcile your GST and PST accounts to the applicable CRA and provincial reports you’ve submitted.
o Review the company’s financial statements, particularly the income statement. Do the numbers look reasonable? Compare them to previous year amounts as well as budgeted amounts to ensure that you've recorded all income and expenses.
o Identify what worked and didn’t work for you regarding bookkeeping over the past year. The start of a new year is a great time to make changes to your process. It may be time for you to outsource some or all of your bookkeeping if you find that you are spending too much time doing your books or falling behind.
3. Close your books, clean up your files and prepare a budget
o Close your books after each fiscal year end. This prevents any unintentional entries being posted into the prior year.
o Clean up physical and electronic files. Keep in mind that the CRA requires you to keep all your records and supporting documents for six years.
o Prepare a budget for the next year
If you're spending more time than you’d like on your bookkeeping or things have gotten a bit too complex, it may be time to get some help. Contact us for a free consultation.