Year End Bookkeeping Checklist for Canadian Businesses 2025

Running a business may sometimes feel smooth and sometimes rough. The last weeks of the year can shape how well the next one starts for your business. A clear Year End Bookkeeping Checklist can help Canadian Businesses go through records, reviews, and tax readiness tasks that can keep the year transition clean. In this blog, we’ll go step by step to focus on what must be checked that happens around the year end. 

Step 1: Review and Update All Financial Records

Year end bookkeeping checklist must start with the base records. A clean record set can support all later steps.

Check All Income Records

Income entries can often drift during the year. Before closing the books, a full check may fill gaps.

• Match recorded sales with invoices issued
• Confirm paid and unpaid invoices
• Review customer credits or refunds
• Check recurring payments for changes
• Look for income entries recorded twice

This step may help reduce errors that can affect tax numbers or year end reports.

Check All Expense Records

Expenses may pile up. Some may even get mixed with personal spending if not tracked with care.

• Review each receipt still not entered
• Check vendor statements for missed bills
• Confirm paid and unpaid bills
• Match monthly subscriptions and service fees
• Look for duplicate expense entries

A clean expense list can support correct profit numbers and smoother tax prep.

Confirm Asset and Liability Entries

Assets and liabilities may reflect the full financial position at year end.

• Record new equipment or tools purchased
• Review loans and interest charges
• Confirm credit card balances
• Update lines of credit
• Review debt payments made during the year

These records may guide tax deductions and planning for the next year.

Step 2: Reconcile All Accounts with Bank and Statements

A reconciliation step may catch errors that remain unseen inside the books.

Reconcile Bank Accounts

Bank statements often show entries that the books may miss, such as fees or returned items.

• Match all entries in the books with bank records
• Review outstanding checks
• Review pending deposits
• Note bank fees or service charges

This may fix mismatches that can create confusion later.

Reconcile Credit Card Statements

Credit cards may hold many small charges that slip through in busy months.

• Match all card charges with expense entries
• Update foreign transaction fees
• Check recurring charges for accuracy
• Note any unauthorized charges to dispute

A full match may help confirm that all expenses fall in the right category.

Reconcile Payment Platforms

Businesses may use platforms such as payment apps or online processors.

• Review payouts
• Match fees charged by the payment service
• Confirm refunds issued
• Check for unsettled balances

This step in the year end bookkeeping checklist may help ensure recorded income equals the actual earned amount after fees.

Step 3: Review Chart of Accounts and Cleanup Categories

The chart of accounts may drift as the year goes on. Cleaning it can make the books easier to read.

Remove or Merge Unused Accounts

Some accounts may no longer serve a purpose.

• Merge old categories into main ones
• Remove unused accounts that may cause confusion
• Recheck naming to keep categories clear

A cleaner chart may speed future entries.

Check Account Coding Accuracy

A review of coding may catch entries sitting in the wrong place.

• Look for expenses coded to income
• Look for income coded as reimbursements
• Confirm asset purchases coded to asset accounts
• Review loan payments split into principal and interest

Correct coding may support better tax planning.

Step 4: Review Sales Tax Records

Canadian Businesses may deal with GST or HST based on the area. A year end check may help avoid filing issues.

Match Sales Tax Collected and Paid

Sales tax collected on invoices may not always match what was remitted.

• Compare total tax collected with reported figures
• Review tax charged on each invoice
• Recheck tax exemptions used on customers
• Confirm input tax credits on expenses

Accurate tax numbers may help avoid late disputes or adjustments.

Review Filing Schedules

A year end period may be a good time to check if sales tax filing frequency still fits the business.

• Review annual revenue
• Check if filing frequency may change next year
• Review past filing deadlines
• Note upcoming filing periods

Staying aware of filing cycles may support timely submissions.

Step 5: Review Payroll Records and Year End Payroll Tasks

Payroll work often comes with specific year end duties.

Review Payroll Entries

Payroll entries may need final clean up.

• Check each payroll cycle to confirm accuracy
• Match net pay, deductions, and employer costs
• Review vacation pay accruals
• Check bonus payments and taxable benefits

Correct payroll entries may reduce issues during T4 preparation.

Prepare Year End Payroll Forms

Businesses may need to prepare certain forms.

• Note T4 and summary deadlines
• Confirm employee personal details
• Review taxable benefits
• Check contractor payments if any fall under reporting rules

Early review may reduce rush during filing season.

Step 6: Review Accounts Receivable and Collect Pending Payments

Cash flow may shift during the year end. Reviewing receivables may help shape next year’s plan.

List All Outstanding Invoices

Unpaid invoices may affect year end income and cash flow.

• Create a current receivables list
• Identify invoices older than thirty days
• Contact clients with pending balances
• Decide which invoices may need follow up

Clear receivables may support a cleaner closing.

Record Bad Debts if Needed

Some invoices may not be collectible.

• Review each long pending invoice
• Decide whether to note it as uncollectible
• Record the bad debt expense if appropriate
• Review policies for the next year

A bad debt review may guide credit policy adjustments.

Step 7: Review Accounts Payable and Clear Pending Bills

Clearing pending bills may reduce clutter and prepare for tax season.

List All Outstanding Bills

Missing bills can distort year end expenses.

• Match vendor statements with internal records
• Identify missing bills
• Note due dates for each pending bill
• Decide which bills should be cleared before year end

A timely check may help avoid late fees.

Review Recurring Charges for Accuracy

Recurring charges may change without notice.

• Check new rates
• Confirm service usage
• Review contracts
• Note any that may be cancelled next year

Tracking recurring charges may support budgeting.

Step 8: Review Inventory at Year End

Businesses that hold inventory may need a physical count.

Conduct a Full Inventory Count

A count may support accurate cost of goods sold entries.

• Count all items
• Note damaged or expired goods
• Update quantities in the system
• Check purchase records

A reliable inventory record may guide pricing and planning.

Review Inventory Valuation Method

The chosen method may influence reported income.

• Review current valuation approach
• Confirm if it still suits the business model
• Review costs recorded
• Check for mispriced items

This step in the year end bookkeeping checklist may help shape next year’s cost control.

Step 9: Review Fixed Assets and Depreciation

Long term assets may need updates before closing the year.

Record New Assets

During the year, new purchases may have been missed.

• Review all large purchases
• Confirm each belongs in asset accounts
• Note purchase details
• Update asset register

Correct tracking may support depreciation entries.

Review Depreciation Entries

Depreciation may lower taxable income.

• Review current depreciation method
• Check entries recorded
• Note assets fully depreciated
• Confirm asset disposals

This may guide tax planning for the next year.

Step 10: Prepare Year End Adjusting Entries

Adjusting entries may bring the books close to reality at the year end.

Record Accruals

Some income or expense may belong to this year even if not yet paid.

• Note unpaid expenses
• Record earned income not yet billed
• Review prepaid items
• Update entries for year end

Accruals may bring financials in line with the actual period.

Record Prepaid Items

Prepaid charges may last into the next year.

• Check deposits
• Review insurance payments
• Review service prepayments
• Allocate amounts to the right period

Prepaid tracking may support better planning.

Step 11: Review Year End Financial Statements

A high level statement review may help business owners see where the year stands.

Review the Income Statement

The income statement may show how profit trends have moved.

• Review revenue trends
• Review expense groups
• Check margin movements
• Note unusual spikes

This review may help guide actions for next year.

Review the Balance Sheet

The balance sheet may reflect the financial strength at year end.

• Review cash position
• Review debt levels
• Review asset changes
• Note key shifts

This may help guide decisions on risk and investment.

Review the Cash Flow Statement

Cash flow may reveal stress points that profit numbers do not show.

• Review operating cash flow
• Review investing cash flow
• Note financing cash flow
• Identify gaps

This review may help shape next year plans.

Step 12: Review Documents Needed for Tax Preparation

A year end period may be a good time to collect the needed tax papers.

Gather Income Proof

Tax related filings may require income records.

• Collect invoices
• Collect statements
• Gather financial reports
• Note unusual income items

A clean set may reduce confusion during filing.

Gather Expense Proof

Some expenses may need documentary support.

• Keep receipts
• Collect vendor bills
• Gather payroll records
• Save bank and card statements

This may help in claiming deductions.

Step 13: Close the Books for the Year

The final step may bring closure to the full Year End Bookkeeping Checklist.

Lock Old Periods

Locking may prevent accidental changes.

• Close past months
• Lock bank reconciliations
• Lock payroll periods
• Save backups

This may protect data.

Save Year End Reports

Reports may support tax filing and planning.

• Save income statement
• Save balance sheet
• Save trial balance
• Save general ledger

This step wraps the year and prepares for the next one.

Year End Bookkeeping Checklist Summary

With this strong Year End Bookkeeping Checklist, your Canadian Business can go through record review, reconciliation, payroll tasks, inventory checks, asset updates, adjusting entries, financial statement review, tax readiness, compliance duties, and final closing. When each step is done in order, the year can close with more confidence and clarity. 

Need more help with bookkeeping for your business in Canada? At Meru Accounting, we offer remote bookkeeping services for Canadian businesses. Contact us now and start outsourcing accounting and bookkeeping of your Canadian business.

FAQs

1. Why may a small business need a Year End Bookkeeping Checklist?
   It can help owners track tasks in the right order and reduce errors during the closing stage.
2. Should a business update its chart of accounts during every year end review?
   It may help keep categories clear and prevent confusion in new entries.
3. Can bank reconciliation at year end reveal missing or wrong entries?
   Yes, it can show charges or deposits that never made it into the books.
4. Why should a business review unpaid invoices before the year ends?
   It may help adjust cash flow plans and point out invoices that need follow up.
5. Can a business write off bad debt during the year end review if an invoice seems uncollectible?
   Yes, it may do so after a full review of the invoice.
6. Why is checking physical inventory important at year end?
   It can support accurate cost entries and guide next year pricing decisions.
7. Should depreciation schedules be reviewed each year during year end work?
   Yes, it may help ensure asset values and deductions stay correct.
8. Why gather all receipts before tax season begins?
   It can help support expense claims and reduce issues during filing.
9. Can a business change its sales tax filing frequency during the year end review?
   It may change if revenue levels or reporting rules shift.
10. Why should payroll records be reviewed at the end of the year?
    It can help prepare accurate T4 forms and reduce later corrections.
11. Should financial statements be reviewed before closing the books for the year?
    Yes, because they may reveal trends or errors that need adjustment.
12. Can recurring charges cause year end issues if the business ignores them?
    They may, since rates can change and create unexpected costs.
13. Why match payment platform records with bookkeeping entries during the year end?
    It can help confirm income after fees and prevent mismatches.
14. Should adjusting entries be made before or after reconciliation during year end work?
    They may be made after reconciliation for more accuracy.
15. Why should a business lock old periods once the year is closed?
    It can help prevent accidental changes that may affect tax filings.
16. Can year end tasks help shape next year’s business goals?
    Yes, they may highlight trends that guide targets for the new year.
17. Why should Canadian businesses save their full year end reports?
    These reports may support tax filing and help in future reviews.
18. Should prepaid items be reviewed during every year end cycle?
    Yes, it may help allocate costs to the right period.
19. Can loan entries affect the accuracy of a year end review?
    They may, because interest and principal must be recorded correctly.
20. Why plan a tax strategy at year end instead of waiting for deadlines?
    It may help the business prepare calmly and reduce last minute stress.