Published by: Track Accounting | Date: November 2025
As 2025 comes to a close, business owners across Canada are preparing to finalize their books, organize their records, and get ready for tax season. Whether you manage your books yourself in QuickBooks Online or rely on professional accountants, year-end accounting ensures your financials are accurate and tax-ready — setting you up for success in 2026.
1. Reconcile All Accounts Before December 31
Begin by reconciling your bank, credit card, and loan accounts. Make sure your records match your statements to avoid discrepancies. Every transaction — deposits, payments, and transfers — should be reviewed carefully for accuracy.
2. Review Outstanding Invoices and Bills
Check all unpaid invoices and outstanding vendor bills. Send payment reminders to clients and clear any pending dues. This helps you understand your real cash flow and ensures smooth year-end closing.
3. Categorize and Verify All Expenses
Properly categorizing expenses such as marketing, software, travel, office supplies, and professional fees is essential for tax filing. Always attach digital receipts to transactions to simplify future audits and compliance.
4. Record Depreciation and Adjust Journal Entries
Assets like vehicles, equipment, and furniture depreciate over time. Recording depreciation ensures your books reflect accurate asset value and reduces taxable income. Don’t forget to post year-end adjusting entries, such as accrued expenses or prepaid income.
5. Review Payroll and Employee Benefits
Ensure payroll records are complete and all remittances are submitted on time. Review bonuses, benefits, and deductions — and get your T4s ready for early 2026.
6. Conduct a Tax Planning Review
Effective tax planning can save you money. Review opportunities like RRSP contributions, business asset purchases, and deferring income to the next year. Discuss with your accountant to maximize deductions.
7. Analyze Financial Statements for Insights
Study your Profit & Loss and Balance Sheet reports to understand profitability and expenses. Year-end analysis helps you identify areas for cost-saving and better budgeting in the coming year.
8. Back Up Your Financial Data
Safeguard your data by creating cloud and physical backups of your accounting files. It ensures business continuity and protects against data loss or system errors.
9. Plan Your 2026 Budget
Use your 2025 performance insights to plan your 2026 budget. Factor in expected expenses, growth goals, and investments. A clear financial plan helps you stay organized and focused throughout the year.
10. Work with a Professional Accountant
Closing your books properly saves time, stress, and penalties. Partnering with a professional accounting team ensures accuracy, compliance, and peace of mind — especially during tax season.
FAQs: Year-End Accounting for Small Businesses
When should I start year-end bookkeeping?
Start in early November to allow enough time for reconciliations, adjustments, and tax planning before the holiday rush.
What happens if I don’t reconcile my accounts?
Unreconciled accounts may lead to reporting errors and issues with CRA compliance. Reconciliation ensures your numbers are accurate and verifiable.
How can Track Accounting help with year-end closing?
Our experts provide full bookkeeping cleanup, reconciliation, payroll review, and year-end reporting to make your financials audit-ready and accurate.
Ready to Close Your Books Smoothly?
Let our team at Track Accounting handle your year-end accounting and help you start 2026 strong.
Contact Track Accounting