Year-End Tax Prep: Essential Accounting Tasks for Businesses

As the year draws to a close, it's time to turn your attention to year-end tax planning, as staying organized can streamline your filing process and maximize your savings. What does tax preparation entail?

Here's a breakdown of essential tasks to tackle that keep your business compliant and you stress-free.

Statement Review

Your financial statements from the year offer a snapshot of your business's financial health. Before the year comes to an end, carefully review your:

• Income statements
• Balance sheets
• Cash flow statements

And any other accounting statements, looking for unusual expenses, figures that don't align with your expectations or missing entries. By spotting inaccuracies or inconsistencies before it's time to file your business taxes, you give yourself plenty of time to make any necessary adjustments. Plus, accurate statements can help you measure your company's performance over the year and better forecast the future.

Account Reconciliation

You're more likely to catch discrepancies when you reconcile your accounts, which is comparing your internal financial records with external statements. Account reconciliation not only helps avoid reporting errors but can also help prevent potential tax liabilities.

Carefully go over bank accounts, credit card statements and loans, being on the lookout for:

• Duplicate entries
• Missed transactions
• Incorrect amounts

Reconciling accounts now can help you reduce the risk of audits and costly penalties.

Assess Tax Deductions and Credits

One of the most critical steps in year-end tax prep is reviewing potential tax deductions and credits that your business may be eligible for. This includes deductions for employee benefits, operating expenses, and even depreciation. If your company focuses on energy-efficient investments or research and development, don't forget to explore any available tax credits.

Deductions and credits can be complex and vary from industry to industry. To ensure you're minimizing your tax burden and taking strategic steps that set you up for success, consider working with a full finance team, not just one lone accountant.

Verify Payroll and Employee Records

Accurate employee records are key to avoiding payroll-related tax issues, so be sure to verify that all:

• Employee wages
• Salaries
• Deductions
• Bonuses

And other employee-related payroll expenses have been recorded properly. Now is also a great time to review freelancer and contractor payments. The work you do now can help ensure year-end compliance with your tax filings, including your T4 slips.

Gather and Prep

Year-end tax filings can be a complex process, making early preparation crucial. Gather all necessary documentation, including receipts, proof of deductions, and financial records. If your business operates in multiple provinces or territories, be sure to account for regional tax requirements and prepare accordingly.

Got all your docs in order? Consider filing your taxes early to skip last-minute stress and hassle altogether.

Review Strategies for the New Year

The end of the tax year is also a great time to review and revise your financial strategies for the upcoming year. Consider how:

• Economic conditions
• Changes in tax laws
• Business growth goals

This may affect your tax planning. Whether you decide to stay the course, revisit your pricing structure, or explore new deduction opportunities, doing the prep work now can put you in a strong financial position moving forward.

Leave the Year-End Work to Us

Don't deal with manual inputs and sifting through physical files–team up with Zenbooks for cloud-based convenience. As your full finance team, we'll take you from prep to filing and beyond. Book a complimentary consultation now!