What a small business owner should expect from their accountant at year-end

For small business owners, knowing what a normal year-end looks like makes it easier to judge the accounting service you receive

FOR MANY OWNERS, the relationship with their accountant is a little vague. You send some files, time passes, and a set of statements and a tax return arrive for signature. That leaves a lot of owners unsure what they are paying for and what they could be asking for.

Knowing what a normal year-end looks like makes it easier to judge the service you get. This piece covers the usual deliverables, the timelines behind them, and the conversations worth having. Every business is different, so confirm the details that apply to you with your own accountant.

The year-end starts with what you hand over

An accountant can only work with the records they receive, so the first part of year-end is really your job. Many firms, such as Soleimani CPA, which offers bookkeeping, tax and financial statement services to small businesses in Vancouver, provide this kind of year-end work, and most will send a request list soon after your fiscal year closes.

What goes into that package depends on how your books are kept, but a typical request includes:

• Bank, credit card and loan statements for the full year, ending on the year-end date
• Your bookkeeping file or general ledger, plus sales and expense records
• Payroll summaries and any HST returns filed during the year
• Details of large purchases, asset sales, new loans or leases
• Last year’s financial statements, tax return and notice of assessment

A good accountant will tell you what is missing rather than guess at it. Expect questions about unusual transactions, owner withdrawals and anything that does not match last year. That is a sign the file is getting proper attention.

Financial statements, and what a “compilation” means now

For most owner-managed businesses, the main deliverable is a set of compiled financial statements. You may still hear these called “Notice to Reader” statements. That label is out of date. The old standard was replaced by a new Canadian standard for compilation engagements, CSRS 4200, which applies to financial information for periods ending on or after December 14, 2021.

Statements prepared under the new standard come with a compilation engagement report instead of the old notice, and they must include a note describing the basis of accounting used. That note matters if a bank or investor reads your statements, because it explains how the numbers were put together.

A compilation is not an audit or a review. Your accountant arranges your information into statements but does not give assurance that it is accurate. If a lender asks for a review or an audit, that is a larger job, so raise it well before year-end.

The T2 return, and the payment date that comes first

If your business is incorporated, your accountant will also prepare the T2 corporation income tax return. The CRA requires the T2 to be filed within six months of the end of the tax year. A corporation with a March 31 year-end, for example, has until September 30 to file.

The date that catches owners off guard is the payment deadline, which comes much sooner. Any balance owing is generally due two months after year-end. Some Canadian-controlled private corporations that claim the small business deduction and meet certain conditions get three months instead. Interest runs on unpaid tax from the due date, even if the return itself is filed on time.

That is why a good accountant does not treat the six-month window as the real deadline. Expect an estimate of tax owing before the payment date, even if the return is still in progress, along with your instalment schedule for the coming year if one applies.

HST and payroll slips run on their own clocks

Not everything is tied to your fiscal year-end. HST returns follow your reporting period. Monthly and quarterly filers file and pay one month after each period ends, while annual filers generally file and pay three months after their fiscal year-end. Self-employed annual filers with a December 31 year-end pay by April 30 and file by June 15.

Payroll slips follow the calendar year. If you have employees, T4 slips and the T4 information return are due by the last day of February for the previous calendar year. If someone else handles your payroll, confirm early who is preparing and filing the slips.

The CRA posts a full list of business and self-employed dates each year, and you can find current deadlines and filing rules on the Government of Canada website. It is worth checking those dates yourself each year. If a due date falls on a weekend or public holiday, the CRA generally accepts it on the next business day.

Planning should be part of the conversation

The finished statements and returns are only part of the value. Your accountant has just reviewed a full year of your numbers, so a year-end meeting is the natural time to look forward.

Good topics for that meeting include how you pay yourself, whether through salary, dividends or a mix of both, and what that means for your personal taxes. You can also ask about the timing of large equipment purchases and whether your bookkeeping setup still fits the business. If you are thinking about hiring, adding a location or selling, mention it now, while there is time to plan.

Some engagements are priced for compliance work only, so it is fair to ask up front what is included and how quickly a finished file usually comes back.

A good year-end should feel predictable. You hand over complete records, your accountant gives you a clear timeline, you know your payment dates in advance, and you leave with a few decisions for next year. If your experience looks very different, it is worth talking with your accountant about what each of you needs from the other.