The year-end for your corporation is approaching and you’re wondering what accounting needs to be done to get ready for the corporate income tax return. This short guide will give you an overview of some important year-end accounting tasks.
- Reconcile your accounts. This is important since it shows that all transactions have been recorded. Make sure to reconcile credit cards, loans, lines of credit, payroll and sales tax liabilities in addition to your bank accounts.
- Invoice. Have you invoiced all of your customers for the work you’ve done? If not, get caught up on those invoices to ensure all revenue earned during the year is recorded.
- Review accounts receivable. Run an aging report and follow up with any customers who owe you money. Also identify any accounts that need to be written-off.
- Count your inventory. On the last day of your fiscal year, perform an inventory count. You’ll also want to verify that your inventory is valued correctly – determine if any inventory items cost more than they’re worth and need to be written down.
- Review your fixed asset listing. Identify any assets that are no longer in use and gather documentation to support any asset purchases made during the year.
- Clean up accounts payable. Run an aging report and review the balances to make sure they are accurate. If there are any balances that don’t look right, request statements from the suppliers.
- Check your income statement. Once the balance sheet accounts are reviewed/reconciled, take a look at your income statement. Do the numbers make sense? Useful comparisons are to prior year and budget. Investigate any large variances.
Now that the accounting is complete, you’re ready to have your corporate tax return done. An important reminder, the income tax return has to be filed within six months of the end the corporation’s fiscal year. However, if there is a balance owing, it has to be paid within two months of the end of corporation’s fiscal year (or paid within three if the corporation is a Canadian-controlled private corporation).