Year-End Bookkeeping Checklist, Canadian Businesses Should Follow in 2025

1. Year-End Bookkeeping Checklist, Canadian Businesses Should Follow in 2025 Closing the books at the end of the year can feel like climbing a mountain, especially for small and medium-sized businesses in Canada. From managing receipts and invoices to reconciling bank accounts and preparing tax documents, there’s a lot to track. Without a clear system, mistakes can creep in, leading to penalties, missed deductions, and stress for business owners. To make the process smoother, here’s a completeYear End Bookkeeping Checklist, Canadian Businesses can use to wrap up 2025 confidently and start the new year organized. Why a Year-End Bookkeeping Checklist Matters Think of year-end bookkeeping as a financial health check for your business. It helps you: ● Spot unpaid invoices or overlooked bills. ● Ensure your financial statements accurately reflect profits and losses. ● Avoid surprises during tax season. ● Make informed decisions about investments or growth strategies. Without proper review, even minor errors can become costly. A structured checklist ensures that nothing falls through the cracks. Step 1: Review and Organize Your Financial Records The first step is going through all your financial transactions for the year. Make sure: ● All invoices issued to clients are recorded.

2. ● All payments made to suppliers, contractors, and employees are documented. ● Receipts for business expenses are properly stored. ● Any cash transactions are accounted for. Accurate records make the rest of the year-end process easier and help you avoid mistakes when filing taxes. Step 2: Reconcile Bank Accounts Bank reconciliation is critical. Compare your books with statements from: ● Business checking accounts ● Savings accounts ● Credit cards ● Online payment platforms Check that deposits and withdrawals match, and flag any discrepancies for review. Even a small mismatch can affect your reports and cash flow analysis. Step 3: Clean Up Your Chart of Accounts Your chart of accounts is like the backbone of your bookkeeping. Take time to: ● Remove unused or duplicate accounts. ● Ensure transactions are assigned to the correct categories. ● Adjust account names for clarity, if necessary. A clean chart makes reporting accurate and simplifies financial analysis for the new year. Step 4: Review Sales Tax Obligations

3. GST/HST compliance is crucial. For year-end: ● Verify all collected sales taxes have been recorded. ● Ensure input tax credits for business expenses are claimed. ● Prepare for any remaining filings or adjustments. Accurate sales tax records prevent fines and simplify the reporting process. Step 5: Examine Payroll and Employee Records Payroll is often one of the most complex areas. At year-end: ● Make sure salaries, bonuses, and deductions are properly recorded. ● Prepare T4 slips for employees. ● Update benefit contributions and vacation accruals. A careful review ensures compliance with government regulations and prevents employee disputes. Step 6: Review Accounts Receivable and Accounts Payable Cash flow is the lifeblood of your business. Check that: ● Accounts Receivable: All outstanding invoices are followed up, and bad debts are written off if necessary. ● Accounts Payable: All bills are recorded and scheduled for payment. This ensures your cash flow statements are accurate and that you’re not missing important payments.

4. Step 7: Conduct an Inventory Check (If Applicable) For businesses that manage physical products: ● Conduct a physical count of inventory. ● Compare it with your recorded inventory levels. ● Adjust for any discrepancies. ● Review your valuation method to ensure it aligns with accounting standards. Inventory accuracy affects both your balance sheet and tax filings. Step 8: Review Fixed Assets and Depreciation Year-end is a good time to assess your fixed assets: ● Record any new purchases. ● Update depreciation schedules.

5. ● Remove disposed or sold assets from your books. Accurate tracking helps in claiming tax deductions and ensures financial statements reflect the true value of your business. Step 9: Make Year-End Adjusting Entries Adjusting entries ensure that income and expenses are recorded in the correct period. Consider: ● Accrued expenses that haven’t been paid yet. ● Prepaid expenses that need to be allocated to future periods. ● Corrections for misposted transactions. These adjustments help create financial statements that reflect the true financial position of your business. Step 10: Review Financial Statements Generate year-end reports and review them carefully: ● Income Statement: Summarizes revenues, expenses, and profit. ● Balance Sheet: Lists assets, liabilities, and equity. ● Cash Flow Statement: Tracks the flow of cash throughout the year. Identify any anomalies, unusual trends, or unexpected losses. These insights can guide strategic decisions for the coming year. Step 11: Prepare Tax Documents Gather everything needed for tax filing: ● Invoices, receipts, and bills ● Bank and credit card statements

6. ● Payroll records and T4 slips ● Inventory counts and fixed asset records Organized documents make tax filing smoother and help you claim all eligible deductions. Step 12: Close the Books Finally, close the year in your accounting system: ● Lock the accounting period to prevent new entries. ● Back up all reports digitally. ● Store physical documents safely for future reference. Closing the books properly ensures compliance and protects your financial data. Additional Tips for a Smooth Year-End ● Start early: Don’t wait until December to begin. ● Leverage accounting software: Automation reduces errors and saves time. ● Collaborate with your accountant: Professional advice ensures compliance and accurate reporting. ● Review prior years: Learn from past mistakes to improve processes. Why Professional Assistance Helps Even if you handle your bookkeeping in-house, consulting a professional can save time, reduce mistakes, and improve financial insights. A qualified accountant can: ● Identify tax-saving opportunities

7. ● Ensure regulatory compliance ● Provide clarity on adjustments and financial statements ● Support planning for growth in the upcoming year Conclusion A thorough Year-End Bookkeeping Checklist that Canadian businesses should follow ensures your records are accurate, taxes are filed correctly, and your business is fully prepared for the new year. By reviewing your accounts, reconciling transactions, organizing documents, and seeking expert help when needed, you can close 2025 with confidence and start 2026 on solid financial footing. WithMeru Accounting supporting your bookkeeping and compliance needs, you get reliable guidance and clean, error-free financials that keep your business ready for growth.