6 Months to File T2: Canadian Small Business Year End Checklist

Last updated: October 16, 2026

Closing your books means reconciling every account, finalizing payroll and T4s, counting inventory, reviewing fixed assets, preparing financial statements, and filing your T2. The one rule that governs the whole calendar is this: your T2 corporate tax return is due within six months of your fiscal year-end. Set that reminder today, then start gathering reconciliations for your accountant.

TL;DR:

• Most small Canadian businesses must file their T2 corporate tax return within six months of their fiscal year-end, with tax owing typically due earlier.
• Accurate reconciliation of bank, credit card, and petty cash accounts over the full fiscal period is crucial to prevent delays and ensure all transactions are properly documented.
• Reviewing accounts receivable, write-offs, accounts payable, and accruals ensures expenses match the period incurred and reduces the risk of financial misstatement or tax issues.
• Physical inventory counts, fixed asset reviews, and verifying capital cost allowance classification help identify shrinkage, damage, or misclassification errors that could impact profitability.
• Staying ahead with mid-year checklists, timely regulatory filings, corporate minute resolutions, and employee benefit reviews minimizes last-minute errors and supports compliance.

General information, not tax or legal advice. Book a free consult.

Table of Contents

• Confirm your fiscal year-end and key filing deadlines
• Reconcile bank, credit card and petty cash accounts
• Review accounts receivable and write-offs
• Verify accounts payable and accruals
• Inventory count and fixed asset review
• Payroll reconciliation and preparing T4/T4A slips
• Review GST/HST and other remittances
• Prepare financial statements and supporting schedules
• Year-end tax planning and final T2 actions
• Common year-end mistakes and red flags to fix now
• When to get professional help (how T-Ledgers supports year-end close)
• Ensuring compliance with year-end filings beyond taxes
• Preparing board minutes and year-end resolutions
• Reviewing employee benefits and year-end reporting
• Updating corporate records and shareholder information
• Author perspective: CPA tips for a smoother close
• How T-Ledgers can help with year-end
• Official CRA and practical resources to consult
• Sources
• FAQ

Confirm your fiscal year-end and key filing deadlines

Most small Canadian businesses default to a December 31 fiscal year, but a corporation can choose another date, and that choice drives every deadline that follows. Check your articles of incorporation or your first T2 return to confirm which date applies to you. Changing it later usually requires CRA approval, except in a handful of specific situations.

Your T2 return is due within six months of your fiscal year-end, and a fiscal period can never exceed a little more than a year. When your year-end falls on a day other than the last day of a month, the return is due on that same day six months later, not on a month-end. Tax owing, in most cases, comes due earlier than the return itself.

Before you go further, lock in these dates:

• Your T2 filing deadline (six months from fiscal year-end)
• Any balance-due date, which often precedes the filing deadline
• T4/T4A distribution and CRA filing, due the last day of February
• GST/HST filing dates tied to your reporting frequency

Bookmark the 2026 CRA filing deadlines for your specific dates once your fiscal year is confirmed.

Law: Income Tax Act s.150(1) (T2 filing); Excise Tax Act s.238(1) (GST/HST returns).

Reconcile bank, credit card and petty cash accounts

Reconciliation is where most year-end delays start, usually because someone only checks the last month instead of the whole fiscal period. A cheque that cleared in month three but never got recorded properly can throw off your entire trial balance if nobody catches it until December.

Work through it methodically:

1. Pull twelve months of bank and credit card statements, not just the most recent one.
2. Match every transaction to your books, flagging duplicates, uncleared cheques, and anything that shows on the statement but not in your ledger.
3. Investigate petty cash separately. It’s small, but it’s also where receipts go missing most often.
4. Write a short note for every reconciling item explaining what happened and how it was corrected.
5. Post the correcting journal entries before you touch your financial statements.

Skipping step four is the mistake that costs you later. When your accountant or a CRA reviewer asks why an entry was adjusted six months ago, “I don’t remember” is not a good answer.

Law: Income Tax Act s.230(1) (records and books).

Review accounts receivable and write-offs

An aged receivables report tells you more than a total balance ever will. Sort it by 30, 60, 90, and 90-plus days, and you’ll usually find that a small number of accounts make up most of the risk.

• Chase anything past 60 days with a direct call, not just an automated reminder.
• Document disputed invoices in writing, including what the customer claims and what you’ve offered.
• Get written approval before writing off any balance, even a small one.
• Record the write-off through an allowance for doubtful accounts rather than deleting the invoice outright.

Bad debts reduce your income for tax purposes only once they’re genuinely uncollectible, not just overdue. A balance you write off in your books but keep pursuing legally needs careful tracking, since the tax treatment depends on when the debt actually becomes bad, not when you decide to stop chasing it.

Pro Tip: Keep a running receivables log all year instead of doing this triage once in December. Twelve months of small check-ins beats one frantic collections push at year-end.

Verify accounts payable and accruals

Expenses belong in the period they were incurred, not the period you happened to pay the bill. That distinction is where accrual accounting earns its name, and it’s where a lot of small businesses quietly get it wrong.

• Confirm every supplier invoice received for the fiscal period has been entered, even if payment hasn’t gone out yet.
• Accrue for services performed but not yet invoiced. A contractor who worked in your last fiscal week but bills in the new year still belongs in this year’s expenses.
• Check the weeks right after year-end for payments that should have been accrued rather than expensed in the new period.
• Keep a written record of any vendor conversation about billing timing, especially for large invoices that straddle the cut-off date.

Getting this wrong doesn’t just distort your financial statements. It can shift taxable income between fiscal years in a way that draws attention if the pattern repeats.

Inventory count and fixed asset review

A physical inventory count near your fiscal year-end is the only reliable way to catch shrinkage, damaged stock, or data entry errors that have been quietly compounding all year. Reconciling that count against your inventory records tells you whether your cost of goods sold is actually accurate or just internally consistent.

1. Schedule the physical count as close to your year-end date as operations allow.
2. Compare counted quantities against your inventory system and investigate every variance over a set threshold.
3. Review fixed assets for disposals, retirements, or impairment. An asset sitting on your books that was scrapped two years ago is not a rare find.
4. Confirm capital cost allowance (CCA) classes match how each asset is actually being used, since misclassification affects your deduction.
5. Document new asset additions with invoices and confirm they followed your capitalization policy rather than being expensed outright.

Fixed asset reviews get skipped more often than inventory counts, mostly because nothing about them feels urgent. That’s exactly why impairment and CCA errors tend to accumulate for years before anyone notices.

Law: Income Tax Act s.20(1)(a) (capital cost allowance); Income Tax Act s.13(1) (recapture); Income Tax Act s.10(1) (inventory valuation).

Payroll reconciliation and preparing T4/T4A slips

Payroll reconciliation deserves its own dedicated block of time, separate from general bookkeeping, because the penalties for getting it wrong land on remittances and slips, not just on your internal numbers.

• Reconcile CPP, EI, and income tax deducted against what you actually remitted to CRA, and resolve any variance before you move to slip preparation.
• Match your payroll records against your CRA payroll account balance, since these should tie out exactly.
• Prepare and distribute T4 and T4A slips by the last day of February following the calendar year, not your fiscal year-end.
• Watch for two recurring errors: contractors who should have been classified as employees, and taxable benefits (like a company vehicle or health premiums) that never made it onto a slip.

Reconciling remittances before filing catches errors while they’re still cheap to fix, instead of after CRA sends a reassessment notice.

Law: Income Tax Act s.153(1) (withholding).

Review GST/HST and other remittances

GST/HST reconciliation runs on its own calendar, separate from your fiscal year-end, and mixing the two up is a common source of confusion. Confirm your reporting frequency first, monthly, quarterly, or annual, since that determines your actual filing dates.

• Compare net tax collected against what you’ve actually remitted over the fiscal period, and account for any timing gaps.
• Confirm every input tax credit (ITC) claimed has a supporting invoice that meets CRA’s documentation requirements.
• Flag any period where a remittance appears to have been missed or underpaid.
• If you find a past error, look into the voluntary disclosures program rather than letting it sit uncorrected.

An ITC without a proper invoice is one of the first things a GST/HST review will catch, and it’s an easy problem to prevent with a simple filing habit throughout the year.

Law: Excise Tax Act s.238(1) (returns); Excise Tax Act s.286(1) (books and records).

Prepare financial statements and supporting schedules

Once reconciliations are clean, the actual statement prep should be the fast part, not the part where surprises show up. You need three core statements: the income statement, the balance sheet, and the cash flow statement, each backed by schedules that tie every number back to source documents.

• Confirm accruals and prepayments have been recorded in the correct period, not just entered somewhere convenient.
• Check amortization and CCA calculations against your fixed asset register.
• Review inventory valuation and any intercompany transactions for consistency with prior periods.
• Assemble your trial balance, fixed asset register, and inventory listing into one package for your accountant, since these are the documents they’ll ask for first.

A clean set of working papers at this stage often shortens your accountant’s review time considerably, which usually means a faster T2 filing and fewer follow-up questions.

Law: Ontario Business Corporations Act s.154 (financial statements at annual meeting).

Year-end tax planning and final T2 actions

Tax planning belongs before your fiscal year closes, not after, since most of the moves available to you disappear the moment the year-end date passes.

• Review shareholder loans, since an unpaid loan from a shareholder can trigger income inclusion if it’s not settled within the required timeframe.
• Check taxable benefits for accuracy and confirm any deferral strategies you used are properly documented.
• Look at deduction opportunities you may have missed, from CCA elections to eligible business expenses.
• Remember the filing rule: your T2 is due within six months of your fiscal year-end, though tax owing, for most corporations, is due earlier, generally two or three months after year-end depending on your CCPC status.
• Write down your reasoning for any judgment call, like an accrual estimate or a CCA election, before you sit down with your accountant.

Small CCPCs claiming the small business deduction often get a slightly later balance-due date than larger corporations, so confirm which rule applies to you rather than assuming the general timeline.

Law: Income Tax Act s.150(1) (T2 filing); Income Tax Act s.157(1) (payment by corporation); Income Tax Act s.125(1) (small business deduction).

Common year-end mistakes and red flags to fix now

Certain errors show up on nearly every messy year-end file, and most of them are preventable with a mid-year check rather than a December scramble.

• Unapplied customer payments sitting in a suspense account instead of matched to invoices.
• Personal expenses run through the business account and misclassified as legitimate deductions.
• Missed payroll remittances, which accumulate penalties and interest quickly.
• Late-filed T4 slips, which carry their own separate penalty from a late corporate return.

CRA reviewers tend to flag the same patterns repeatedly: round-number expense entries, personal-sounding vendor names, and a big swing in a specific expense category with no explanation attached. Document the reason behind anything unusual while you still remember why you made the entry.

Pro Tip: Build a simple mid-year checklist, even a two-page version of this one, and run through it every June. Catching a misclassified expense in July costs you five minutes. Catching it in March of the following year costs you a reassessment letter.

When to get professional help (how T-Ledgers supports year-end close)

Some year-ends genuinely need outside expertise, particularly when you’re juggling multiple CCA classes, a physical inventory count, contractor versus employee questions, or an unresolved CRA notice. If more than one of those applies to your business this year, that’s usually the signal to bring in a professional rather than push through alone.

T-Ledgers Accounting is built around exactly these bottlenecks:

• Bookkeeping and catch-up bookkeeping for businesses behind on reconciliations
• Corporate tax and GST/HST filing handled by CPA-led staff
• Virtual CFO support for tax planning decisions before year-end, not after
• Payroll services to keep remittances and T4 preparation accurate

This firm operates fully remotely with flat-rate pricing that means no surprise invoice after a complicated file turns out to be more complicated than expected.

Ensuring compliance with year-end filings beyond taxes

Tax deadlines get most of the attention, but a corporation carries other year-end obligations that have nothing to do with the CRA. Skip one of these and the tax return can be perfect while the corporation itself falls out of good standing.

Every provincial or federal corporation files an annual return with its incorporating jurisdiction, separate from the T2 tax return filed with CRA. These are two different filings with two different regulators, and confusing them is one of the more common year-end mix-ups. Federal corporations file their annual return with Corporations Canada; provincially incorporated businesses file with their provincial registry. Miss this filing for long enough, and the corporation risks administrative dissolution, which is a far bigger problem than a late tax return.

Business licences and permits also tend to run on their own renewal calendars, often tied to a municipal fiscal year rather than your corporate one. A restaurant’s health permit, a contractor’s trade licence, or a home-based business permit each has its own renewal window, and none of them wait for your accountant to finish your T2.

If your business operates in a regulated industry, check for sector-specific filings too. Insurance, financial services, and certain professional corporations carry additional annual reporting requirements on top of the standard corporate and tax obligations.

Build a short compliance calendar alongside your tax deadlines:

• Annual return (federal or provincial, depending on incorporation)
• Business licence and permit renewals
• Industry-specific regulatory filings, where applicable
• WSIB or provincial workers’ compensation renewals, if you have employees

None of these are complicated individually. The risk is forgetting one because all your attention went to the tax deadline.

Law: Corporations Information Act s.3.1 (annual return).

Preparing board minutes and year-end resolutions

Corporate minute books get neglected more than almost any other part of year-end prep, mostly because nothing forces the issue the way a tax deadline does. That neglect catches up with you during a due diligence review, a financing application, or a CRA audit that asks to see corporate governance records.

At minimum, your board (even a board of one, for a sole shareholder-director) should pass and document a handful of standard year-end resolutions:

• Approval of financial statements for the fiscal year just closed
• Declaration of dividends, if any were paid or are being declared for tax planning purposes
• Approval of officer and director compensation, including bonuses tied to year-end results
• Ratification of major transactions made during the year, particularly loans to or from shareholders
• Appointment or reappointment of the corporation’s accountant or auditor for the coming year

Draft these as formal minutes, even for a small, closely held corporation. A one-page resolution signed by the director takes ten minutes and creates a paper trail that protects both the corporation and the shareholders if anyone ever questions how a decision was made.

If dividends were declared during the year, the minutes should specify the amount, the date, and which class of shares received them, since this detail matters for both corporate law compliance and the T5 slips you’ll need to issue. Keep signed copies in the minute book, not just a digital draft that never got approved on paper.

Law: Ontario Business Corporations Act s.140 (records).

Reviewing employee benefits and year-end reporting

Employee benefits carry their own year-end reporting obligations, separate from the payroll remittance reconciliation covered earlier, and they’re easy to overlook because they don’t generate a monthly remittance the way CPP and EI do.

Vacation accruals need a fresh look at year-end. Confirm your vacation pay liability on the balance sheet actually reflects what employees have earned and not yet taken, based on your province’s employment standards. A business that’s been undercounting this liability for years can face an unpleasant surprise when an employee finally cashes out a large accrued balance.

RRSP contributions, particularly for group RRSP or matching programs, need to be reconciled against what was actually deducted from payroll and remitted to the plan provider. Confirm the totals on file match what will appear on employee tax slips, since a mismatch here creates headaches for staff at personal tax time, not just for the corporation.

Other taxable benefits deserve the same scrutiny:

• Company vehicle personal-use benefits, calculated and added to the appropriate T4 box
• Health and dental premiums paid by the employer, which may or may not be taxable depending on the plan structure
• Life insurance premiums paid on behalf of employees
• Gifts, awards, or bonuses that exceed CRA’s non-taxable thresholds

Getting these onto the T4 accurately the first time is far less work than reissuing amended slips after February, once employees have already filed personal returns using the original numbers.

Updating corporate records and shareholder information

A corporation’s minute book should reflect exactly who owns it and who runs it, and year-end is the natural checkpoint to confirm that’s still true. Shareholder registers drift out of date more often than owners realize, especially in businesses that have brought on new investors, bought out a partner, or issued additional shares during the year.

Review these records as part of your year-end process:

• Shareholder register, confirming current ownership percentages and share classes match reality
• Director register, updating for any changes in who sits on the board
• Registered office address, particularly if the business has moved during the year
• Share certificates, ensuring they were actually issued for any new shares and properly recorded

If ownership changed hands during the year, whether through a sale, a new investor, or a family transfer, the minute book needs a formal record of that transaction, including the share transfer agreement and updated register entries. This isn’t paperwork for its own sake. A buyer, a lender, or CRA reviewing an intercompany transaction will ask to see this trail, and a shareholder register that hasn’t been touched in three years raises more questions than it answers.

Corporate address and director changes also typically need to be filed with your incorporating jurisdiction, not just updated internally. A registry filing that lags behind reality by a year or more can complicate everything from a bank loan application to a future sale of the business.

Law: Ontario Business Corporations Act s.140 (records); Canada Business Corporations Act s.20 (corporate records).

Author perspective: CPA tips for a smoother close

The single habit that separates a calm year-end from a chaotic one is monthly reconciliation, not a year-end sprint. Three timing tips: confirm your fiscal year-end date in month one, not month twelve; accrue payroll and GST/HST monthly instead of annually; and start your inventory count planning at least six weeks out. My preferred short checklist: bank reconciled, payroll remitted, receivables aged, T2 date confirmed.

— Wajahat Ajmal (CPA)

How T-Ledgers can help with year-end

If your reconciliations are behind, your payroll remittances need a second look, or you’re staring down a T2 deadline with no clean trial balance in sight, T-Ledgers Accounting is built for exactly that gap. Where a traditional accountant bills by the hour and lets year-end costs spiral the messier your books get, T-Ledgers charges a flat rate agreed upfront, so a complicated fiscal year doesn’t turn into a surprise invoice.

For a straightforward year-end close, Bookkeeping Services get your reconciliations current. For the tax return itself, Corporate Tax and GST Filing covers your T2 and GST/HST obligations; current prices can be found on the pricing page. Businesses that want ongoing tax planning, not just a year-end scramble, often start with the Virtual CFO service from $2,500 per month, or bundle everything through the Growth, Scale, or Ultimate packages, starting from $350 per month (Growth, quarterly bookkeeping) or $500 (Scale, monthly bookkeeping).

Book a first call and bring your last set of financial statements, your latest bank reconciliation, and your fiscal year-end date. That’s enough for a T-Ledgers CPA to tell you exactly what your close needs.

Official CRA and practical resources to consult

Cross-check your own deadlines against primary sources before you finalize anything:

• CRA’s 2026 tax deadlines, for the current filing calendar
• T2 corporation income tax guide, for return preparation rules
• Xero’s year-end checklist, for a practical bookkeeping walkthrough
• Paysums’ tax table change log, for tracking rate changes affecting your calculations
• T-Ledgers’ 2026 deadline guide, for a Canada-specific date summary

Sources

• Canada
• Canada
• Small business year-end checklist: How to close your books in Canada | Xero

FAQ

What should a year-end audit checklist include?

A thorough checklist covers bank and credit card reconciliations, accounts receivable and payable review, inventory counts, fixed asset and depreciation checks, payroll remittance reconciliation, and preparation of financial statements with supporting schedules. Auditors also expect documented explanations for any unusual entries or adjustments made during the period.

How do I determine my corporation’s fiscal year-end?

Your fiscal year-end is set when you incorporate, usually documented in your first T2 return, and most small corporations default to December 31. Changing it afterward generally requires CRA approval, except in specific allowed circumstances.

Can an accountant earn $500,000 a year?

Some CPAs, particularly partners at larger firms or those running high-volume practices, can reach that income level, but it’s well above typical earnings for most accounting professionals. Income varies enormously based on specialization, client base, and whether the accountant owns the practice or works as an employee.

What are the four basic closing entries?

The standard closing entries transfer revenue and expense account balances into an income summary account, move that income summary balance into retained earnings, and finally close the dividends or withdrawals account into retained earnings as well. These entries reset temporary accounts to zero so the next fiscal period starts clean.

When is a corporation’s T2 return due?

The T2 return is due within six months of your fiscal year-end, and any tax owing is generally due earlier, often two or three months after year-end depending on your corporation’s status. T-Ledgers Accounting’s Corporate Tax and GST Filing service handles this filing for from 1000 $ per year.

Recommended

• 2026 Tax Deadlines Canada: Key Dates to Remember
• Flat Rate Corporate Tax Filing for Canadian Small Businesses
• 2025 Tax Deadlines Canada: Key Dates to Remember
• Business Tax Filing

This article is intended to inform readers in general terms. It is not intended to provide any tax or business advice. Please consult your T-Ledgers advisor if you have any questions about your unique situation. While we have tried to ensure the accuracy of the information in this article, we accept no liability for errors or omissions.