It’s a good idea to perform certain year-end tasks with your financial records at the end of the calendar year. Some of the tasks are just good financial housekeeping, while others are required by the government.
Fortunately, you can spread the tasks over the period from December to February.
The following sections outline information about the tasks to perform in each month, as well as employee-related tasks for the end of the year.
December tasks
December is a good time to tie up loose ends for the closing year, to make profit distributions, and to start preparing for tax time with your accountant.
Create and send customer statements
The end of the year is a good time to remind your customers of any outstanding balances that they owe to you, or to send them a statement of their activity throughout the year.
Make distributions
It’s not mandatory, but you can choose to distribute profits (also known as Retained Earnings) to the owners or partners at the end of the year.
Prepare for taxes
Many small business owners use an accountant, especially at tax time.
If you haven’t already done so, now is a good time to give your accountant access to your QuickBooks Online company so they can review your financial reports and other data, and even make any necessary changes before the end of the year.
January tasks
January is when you should reconcile your accounts, prepare summary reports, and (optionally) close your books for the previous calendar year.
If you haven’t already done so, it’s also a good time to get in touch with your accountant and talk about preparing for tax time.
Reconcile your accounts
At the end of the year, and when you prepare your taxes, you’ll want to have the most up-to-date and correct information in your financial reports. Reconciling can help ensure that.
When you reconcile an account, you compare the beginning balance and transactions listed in your QuickBooks Online company file with your monthly bank or credit card statements to make sure they match. Reconciling is like balancing a chequebook, as you review your bank statement to make sure it matches the amounts you recorded in your cheque register.
The process helps to ensure that important financial reports, like your Balance Sheet, are accurate.
Reconciling can seem intimidating if you haven’t done it before, or if you haven’t done it for a while if we can be of assistance please get in touch
Run Balance Sheet and Profit and Loss reports
The start of the new year is the natural time to run reports and evaluate how your business performed over the previous year.
Running reports is also an essential part of preparing for taxes.
The two most important reports that you and your accountant will need are the Balance Sheet and Profit and Loss reports, and it’s a good idea to run these reports at the beginning of the year. Make sure the date range in the Transaction Date field for these reports covers the year you’re reporting on.
February tasks
The bulk of your year-end work should be complete by February, with just a task or two to finish up and prepare for taxes.
Prepare for taxes
An accountant is a valuable resource, especially at tax time. If you don’t have one or are looking for a change give us a call
If you have employees (not independent consultants or contractors), there are additional tasks you should complete at the end of the year, along with additional government forms to file and deadlines to meet.
If you use standard QuickBooks Online Payroll, you can access information about year-end payroll tasks in QuickBooks Online by selecting Employees from the left menu, and then selecting Payroll year-end guide.
If you use a different payroll provider, it’s important that you consult them for items and forms to complete for the end of the year.
Review these important direct deposit cut-off dates as you plan your year-end payroll work.
Payroll date
Approve payroll by
December 24, 2021
December 22, 2021
December 25, 2021
N/A on holiday
December 26, 2021
N/A on holiday
December 27, 2021
N/A on holiday
December 28, 2021
N/A on holiday
December 29, 2021
December 23, 2021
December 30, 2021
December 24, 2021
December 31, 2021
December 29, 2021
January 1, 2022
N/A on holiday
January 3, 2022
N/A on holiday
January 4, 2022
December 30, 2021
January 5, 2022
December 31, 2021
Other dates to remember
As you work through your year-end plan, don’t forget these important dates for your T4 and RL-1 forms.
January 4, 2022- Electronic filing options are available online with Canada Revenue Agency and Revenu Québec.
February 28, 2022- The deadline to export your T4 file and submit T4s and RL-1s with CRA and Revenue Quebec. You also must provide your employees a copy for their own records, which they use to do their personal income tax.
Records are all of your accounting and other financial information documents. These documents must be kept organized. The type of information your records contain depend on your situation and other factors such as:
your business type
the format you use to keep your records (paper, electronic or a combination of the two)
if you have converted any paper records or supporting documents into an electronic version
if you are involved in e-commerce (for more information, go to E-commerce)
if you are a GST/HST registrant
if you are an employer
Note
The Canada Revenue Agency (CRA) has detailed information for situations where your records, including those of your business, are affected by a disaster. For more information, including what qualifies as a disaster, go to Disasters and disaster relief.
If you need more information after reading the following topics, call 1-800-959-5525.
Business records Keep income, expense, motor vehicle, and property records
GST/HST and payroll records Information that GST/HST registrants and persons claiming a GST/HST rebate or refund must keep in their records, and the information that employers must keep in their records.
Specific information that certain entities have to keep Information that corporations, trusts, registered agents for registered political parties, official agents for candidates in a federal election, and registered charities, registered Canadian amateur athletic associations and other qualified donees must keep in their records.
If you do not keep track of exactly how much cash you’re making, you have no idea whether your choices and strategies are effective or not. And if you do not track these things you won’t have any idea how to fix issues that arise.
When picking strategies, you want to ensure you are as effective as possible. To do so, it is advisable for you to review your progress and adjust and/or revise your strategy, no less than on a monthly basis. If you are tracking often you will always ensure you keep on top of small troubles so they do not escalate to larger issues.
Unfortunately no business idea is truly unique anymore, which means that from time to time you will experience a reduction in profits. When this inevitably happens the best strategy is to revisit your marketing and advertising strategies, review your prices and evaluate your cost of goods margins.
If you do not keep track of how much cash you are making, you truly won’t have any idea of how profitable and sustainable your company is and will be in the future. If you do not know this you cannot hope to be in business for a long time. The simplest strategy for keeping yourself in business is to monitor your cashflow and profits over time. If you are not doing this you will not be prepared to weather hard drops in the market.
If you’re a small business owner, you might be wondering if you need to get a bookkeeper or an accountant – or both.
And now that you understand the need for bookkeeping, you’re might be wondering, “How does it differ from accounting?”
Good question.
The words “bookkeeper” and “accountant” are often used interchangeably. However, there are some key differences that determine the main responsibilities of each role.
–Bookkeeping is a Subset of Accounting–
An accountant, professional bookkeeper, or an employee of the business can do your bookkeeping.
If you’ve just started a business, chances are you’ll be doing the bookkeeping yourself.
This is no bad thing. When launching a new business venture, it’s crucial that you have an intimate grasp of your financial situation. What better way than to do the bookkeeping yourself?
Essentially, bookkeepers take care of the day-to-day financial work.
They keep detailed and accurate financial accounts and use this financial clarity to help make informed business decisions.
–Accountants are Financial Experts–
Accountants are usually qualified, registered members of a statutory association. So they often have titles like CPA (Certified Public Accountant) or CA (Chartered Accountants).
That’s how they can charge the big bucks.
These experts will use the accounts provided by the bookkeeper. They focus on analyzing the transactions to provide financial advice.
They’ll also use the information in the accounts to file tax returns and other reports.
Whereas bookkeepers handle the day-to-day financial tasks, accountants often step in on a quarterly basis to provide advice and make adjustments.
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An accountant, professional bookkeeper, or an employee of the business can do your bookkeeping.
