Small business accounting: 5 smart year-end steps

Year-end hits fast. One minute you’re trying to finish projects and manage holiday schedules, and the next you’re staring at your books thinking, “What exactly am I supposed to review?”

If you’re worried about errors, short on time, or unsure what “done” looks like, you’re in good company. Most small business owners don’t need a complicated close process. They need a practical routine that:

• reduces mistakes,
• makes reports more reliable, and
• keeps tax season from becoming a panic.

Below is a five-step checklist you can use to tighten your numbers and walk into the new year with more clarity.

Why year-end reviews matter for owners

Year-end isn’t just a formality. It’s when your reports turn into decisions:

• Can you afford a hire next quarter?
• Is your pricing actually working?
• Which services are profitable and which are draining time?
• Are you heading into cash-flow trouble?

When your numbers are clean, your decisions are easier. When they’re messy, you end up guessing.

A year-end review also helps you catch small issues before they become expensive ones—like duplicate expenses, missing deposits, or miscategorized purchases.

Financial reporting: what “accurate” really means

Accurate financial reporting doesn’t mean perfection. It means your reports are trustworthy enough to use.

At year-end, that usually means:

• bank and credit card balances match your accounting software,
• income and expenses are categorized consistently,
• receivables and payables reflect reality, and
• you have documentation to support key amounts.

The CRA also puts a strong emphasis on keeping records organized. Their “Learn about your taxes” educational resources are a helpful, plain-language refresher on how taxes work and what it means to be prepared.
(Yes, it’s aimed at learning—but the basics are useful when you’re tightening your processes.)

Here’s the mindset shift: year-end close is less about “closing” and more about confirming your business story matches your numbers.

Step 1: Reconcile accounts and fix gaps

If you only do one thing, do this.

Reconciliation means you compare your bank and credit card statements to what’s recorded in your books. If they don’t match, you find out why.

What to check

• Bank account balances
• Credit card balances
• Payment processor deposits (Square, Stripe, PayPal, etc.)
• Transfers between accounts (these are common sources of confusion)

Common gaps to fix

• Missing expense receipts
• Duplicate transactions
• Deposits recorded as “sales” when they were transfers
• Expenses categorized as “misc” that should be more specific

Quick win

• Start with one account (usually your main chequing account).
• Work month-by-month from the last reconciled date.

Two or three focused sessions can clean up a surprising amount.

Step 2: Review revenue, expenses, and categories

This step is about consistency.

If you categorize the same type of expense three different ways throughout the year, your reports won’t be reliable. And if your revenue streams aren’t clearly separated, you won’t know what’s actually working.

Year-end category cleanup checklist

• Review “Miscellaneous” and reclassify what you can
• Ensure meals, travel, supplies, subscriptions, advertising, and vehicle expenses (if relevant) aren’t mixed together
• Separate owner expenses from business expenses
• Confirm revenue categories reflect how you sell (services vs products, or by service line)

Practical example
If you run a service business and you’re thinking about dropping a service next year, you need to see that service’s revenue and related costs clearly. That’s impossible if everything is lumped into one bucket.

Mini test
Ask yourself: “If I had to raise prices next month, could my reports tell me where costs increased?”
If not, your categories need a tune-up.

Step 3: Clean up receivables, payables, and cash flow

This is the “reality check” step—because your reports should reflect what’s actually owed and what’s actually due.

Accounts receivable (money owed to you)

• List unpaid invoices
• Follow up on anything overdue
• Decide what’s collectible vs unlikely to be paid

Accounts payable (money you owe)

• Confirm outstanding bills
• Check recurring subscriptions that might be billed annually
• Make sure vendor statements match your records (if you use them)

Why this matters
A business can look profitable on paper while still struggling with cash flow. Cleaning up receivables and payables helps you see the true story.

Quick actions

• Send one clear “year-end follow-up” email for overdue invoices
• Set a cut-off date for invoicing work completed this year
• Decide whether you’ll collect deposits for large projects next year

Step 4: Verify payroll and owner payments

Payroll and owner payments are common “oops” areas at year-end because they’re time-sensitive and often handled in a rush.

Even if you’re not running formal payroll yet, you still want clarity on:

• what was paid out,
• when it was paid, and
• how it was recorded.

If you have employees

• Confirm payroll totals match what your payroll system reports
• Ensure deductions and remittances are recorded properly
• Check that employer contributions are categorized consistently

If you pay contractors

• Confirm invoices are saved and matched to payments
• Ensure you’re not mixing contractor payments into regular wages categories

Owner payments

• Confirm how you recorded draws or salary
• Avoid mixing personal spending into business expense accounts without notes

This is one of the biggest year-end stressors because it’s easy to “just get it done.” A quick review reduces risk.

Step 5: Build a CRA-ready record trail

This step directly addresses the fear of “What if CRA asks questions?”

CRA guidance explains that records are your accounting and financial information documents and they must be kept organized.
They also state that, generally, you must keep required records and supporting documents for six years from the end of the last tax year they relate to.

What to store (and where)

• Income: invoices, deposit records, payment confirmations
• Expenses: receipts, invoices, statements
• Contracts: client agreements, contractor agreements
• Notes on unusual transactions (big purchases, one-time refunds, insurance claims)

A simple system that works

You don’t need complex software or a perfect filing system at year-end. What matters most is consistency and clarity.

A straightforward setup many small businesses use is:

• One folder per year
• Inside it, clearly labelled subfolders for:
  Income / Expenses / Payroll / Taxes / Contracts / Notes

Add a short “year-end notes” file that answers a few key questions:

• Was anything unusual this year?
• Did your business structure, services, or pricing change?
• Were there any one-off purchases, refunds, or major shifts?

If you want a refresher on how Canadian taxes work and what it actually means to be prepared, the Canada Revenue Agency’s educational resources are a helpful reference. They explain the basics without technical overload and can help you understand why organized records matter before tax time:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/educational-programs.html

Using a simple system like this keeps your financial reporting aligned with CRA expectations and makes year-end review far less stressful—without drowning you in jargon or unnecessary steps.

Quick year-end checklist you can copy

Use this as your “close the year” list:

• Reconcile bank accounts (match statements to books)
• Reconcile credit cards and payment processors
• Reclassify “misc” expenses into clear categories
• Confirm revenue categories reflect how you sell
• Review unpaid invoices and overdue accounts
• Confirm outstanding bills and recurring subscriptions
• Verify payroll totals and recording (if applicable)
• Review owner payments and personal/business separation
• Save documentation for major transactions
• Create a year-end notes file for anything unusual
• Generate final reports (P&L/Income Statement, Balance Sheet, cash view)

Short, clear, and repeatable.

When to bring in help

You may want professional support if:

• your reconciliations don’t match and you’re not sure why,
• you’ve fallen behind and year-end feels impossible,
• you’re making decisions without confidence in the numbers,
• your business grew and your system didn’t keep up,
• you want cleaner reports for budgeting, hiring, or financing.

Even one “cleanup and set up” project can make next year dramatically easier.

Book help with DKAJ

If you want your year-end done cleanly, with reports you can trust, DKAJ can help you tighten your process and get organized fast. Learn more about small business accounting support or get to know the team on the About Us page.

Disclaimer: This article is general information for Ontario businesses and isn’t legal, tax, or financial advice. For guidance specific to your situation, consult a qualified professional.

FAQs

1) What should I do first at year-end for my small business books?
Start with reconciling your bank and credit accounts so your balances match. This gives you a reliable base for every report that follows.

2) What reports should I review at year-end?
Most owners start with an Income Statement (Profit & Loss) and a Balance Sheet, then review cash flow trends and unpaid invoices/bills.

3) How long do I have to keep business accounting records in Canada?
CRA guidance says you generally must keep required records and supporting documents for six years from the end of the last tax year they relate to.

4) What counts as “records” for CRA purposes?
CRA says records are your accounting and other financial information documents, and they must be kept organized.

5) When should I hire help for year-end financial reporting?
If you’re behind, unsure what to review, or don’t trust the numbers you’re using to make decisions, a professional review can save time and reduce error risk.

Tax Preparation Services: 5 Must-Know Life Changes

A big life change is exciting (or stressful, or both). Then tax season shows up and suddenly you’re wondering: Do I have to tell the CRA? Did I miss a credit? Why does my refund look different?

You’re not overthinking it. Major life events can affect what you report, what you qualify for, and how smoothly your benefits get paid. Debt.ca also flags that milestones like job changes, marriage, or moving can impact your taxes and financial planning.

Below are the 5 must-know tax changes people in Ontario run into after marriage, having children, starting a new job, or moving—plus practical steps to keep things accurate and low-stress.

Why life changes can change your taxes

The CRA relies on your personal details to administer taxes and to calculate certain benefit/credit payments. If key info is outdated (like your address or marital status), you could end up with delayed payments, incorrect benefit amounts, or a return that needs fixing later.

Here’s the good news: most of the pain comes from a few common gaps—things not updated, documents missing, or deadlines misunderstood. Fix those and you’re already ahead.

Common worries we hear:

• “I don’t know what I’m supposed to update.”
  
  
• “I’m terrified of filing wrong and getting hit with penalties.”
  
  
• “I don’t want to miss credits or benefits I should get.”
  
  

Let’s handle those one by one.

Personal tax return help: the “update-first” checklist

The 10-minute CRA profile check

Before you even think about forms and receipts, do a fast check of the personal info that tends to break after a life change:

• Marital status (married/common-law/separated/divorced/widowed)
  
  
• Address (especially if you moved recently)
  
  
• Direct deposit (so refunds/benefits go to the right place)
  
  

The CRA’s “Update your information” hub is a useful reference for what can be changed and where. 

Your “tax folder” for life changes

Create one folder (paper or digital) and drop in:

• Dates of the life change (move date, wedding date, job start date)
  
  
• New slips (T4s, childcare receipts, moving receipts, etc.)
  
  
• Any CRA letters/notices you receive
  
  
• A quick note: “What changed?” + “What questions do I have?”
  
  

This saves you from the “March panic scroll.”

5 must-know tax changes after marriage, children, a new job, or moving

1) Marital status updates (and why timing matters)

If you got married, became common-law, separated, divorced, or were widowed, your marital status matters for taxes and benefit calculations.

What people get wrong: waiting until tax season to update it. The CRA specifically provides a process for updating marital status (including online steps in CRA My Account).

Quick checklist

• Update your marital status in CRA My Account when it changes (and keep the date handy).
  
  
• If you’re separated, CRA guidance can treat the timing differently (for example, separation rules often depend on how long you’ve lived apart).
  
  

Why it matters

• Your marital status can impact benefit and credit amounts and what information you report.
  
  

If your fear is “costly mistakes”: this is one of the most common places people slip, especially in the year the change happened.

2) Benefits and credits may change with family updates

Having a child (or changes in custody/living arrangements) can affect benefit eligibility and amounts. The CRA notes that marital status and personal info updates can affect benefit and credit payments.

What to do

• Make sure the CRA has your current marital status and address.
• Keep childcare-related receipts and any documentation tied to the change.
  

3) A new job can change your tax withheld

Starting a new job (or taking a second job) can change:

• How much tax is withheld from your pay
  
  
• Whether you owe at tax time
  
  
• Whether your refund shrinks compared to last year
  
  

Typical “uh-oh” moments

• You worked multiple jobs and each employer withheld as if it was your only income.
  
  
• Your taxable benefits changed (insurance, allowances).
  
  
• Your pay went up (or became variable) and your deductions didn’t match reality.
  
  

Quick steps

• Keep all T4s and notes about start/end dates.
  
  
• If you’re unsure why tax withheld looks different, ask for personal tax return help early—this is where proactive planning saves headaches.
  
  

A helpful mental rule: the more income streams you add, the more valuable professional review becomes.

4) Moving can affect what you can claim and what you need to update

Moving is one of those “life admin” tasks that has tax ripple effects.

First: update your address
The CRA provides clear ways to update your personal address (including options like forms and instructions).
And the Government of Canada notes that address updates often need to be done per department because systems aren’t automatically connected.

Second: track move details
Even if you’re not sure you can claim anything, write down:

• Move date
  
  
• Old/new addresses
  
  
• Why you moved (for work? school? family?)
  
  
• Basic receipts (moving truck, storage, travel)
  
  

5) You may need to fix or adjust a return after filing

Life happens. Sometimes you file, then realize you forgot something—or you get a missing slip later.

The CRA explains you generally need to wait until you receive your Notice of Assessment before requesting a change to your return.
They also publish guidance on changing a return after filing and the methods available.

If you discover an error

• Don’t panic.
  
  
• Gather your documents.
  
  
• Use CRA’s official change-return process after your NOA, or work with a tax professional to get it corrected cleanly.
  

When tax preparation services are worth it

If your year included one life change and your taxes are simple, DIY might be fine.

But tax preparation services are especially worth it when you have:

• Multiple changes in the same year (move + new job + baby)
  
  
• More than one income source
  
  
• Unclear credit/benefit eligibility
  
  
• A return you may need to adjust after filing
  
  

What clients usually want most: confidence that nothing got missed—and that their CRA profile and reporting match what happened in real life.

If you’re aiming for “no surprises,” that’s the real value.

Quick steps: what to do this week

Here’s a simple plan you can follow in under an hour:

1. Update marital status (if applicable).
   
   
2. Update address and confirm mail can reach you.
   
   
3. Confirm direct deposit is correct.
   
   
4. Create your life-change tax folder (dates + documents).
   
   
5. Write down 3 questions you want answered (credits, deductions, what to claim).
   
   

That’s it. You’ve reduced most of the risk already.

Book help with DKAJ

Major life changes can make taxes feel uncertain. If you want confidence that everything is updated correctly and nothing is missed, DKAJ’s tax preparation services are designed to support you through every step.

From updating CRA information to identifying credits tied to your situation, their team helps ensure your return reflects your current life accurately. If you’re ready for clear answers and reliable support, contact DKAJ to get started and book your consultation today.

FAQs

1) Do I have to tell the CRA when I get married or separated?
Yes—your marital status can affect benefit and credit payments, and the CRA provides options to update it (including online through CRA My Account). 

2) What should I update with the CRA after moving?
At minimum, update your address and review your direct deposit so refunds and benefit payments go to the right place. 

3) Why do my taxes feel different after starting a new job?
Withholding can change with income, benefits, and multiple jobs. Keeping all slips and asking for help early can prevent a surprise balance owing.

4) Can I fix my tax return after I’ve filed?
Usually yes, but the CRA generally requires you to wait until you receive your Notice of Assessment before requesting changes.

5) When should I get professional help for my personal tax return?
If you’ve had multiple life changes, have more than one income source, or aren’t sure which credits/benefits apply, professional support can reduce risk and save time.