Pre-Tax Filing Checklist for Ontario Small Businesses

Part 1 - Essential Financial Reviews

Tax season is in full swing, and many Ontario small business owners are gearing up to file their returns. While it may be tempting to rush through the process, taking the time to review your financial records can help you maximize deductions, avoid costly errors, and ensure compliance with CRA requirements.

At KKCPA, as a leading Ontario-based accounting firm specializing in small business tax planning, we understand the importance of thorough preparation. In this first installment of our two-part series, we’ll walk you through the essential financial reviews every small business should complete before filing.

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1. Review Your Income Statements and Balance Sheets

Before filing your taxes, ensure your financial statements accurately reflect your business’s performance.

Key Checks:

• Reconcile All Accounts: Match your bank statements with your accounting records to catch discrepancies.
• Verify Revenue Reporting: Ensure all income (including cash sales, online payments, and late invoices) is recorded.
• Assess Expenses: Confirm that deductible expenses (e.g., rent, utilities, supplies) are properly categorized.

Why It Matters: Errors in income or expense reporting can trigger CRA audits or missed deductions.

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2. Confirm Payroll Compliance

If you have employees, payroll errors can lead to CRA penalties.

Key Checks:

• Verify T4s and T4As: Ensure all employee and contractor slips are filed correctly.
• Remit Source Deductions: Confirm that CPP, EI, and income tax withholdings are paid to the CRA.
• Review Employee Benefits: Ensure taxable benefits (e.g., company vehicles, gifts over $500) are reported.

Why It Matters: Late or incorrect payroll filings can result in fines.

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3. Reconcile GST/HST Accounts

If your business collects GST/HST, ensure your filings align with your financial records.

Key Checks:

• Match Sales Tax Collected: Compare your GST/HST filings with your revenue reports.
• Claim Input Tax Credits (ITCs): Ensure all eligible business expenses include GST/HST reclaims.
• Review Quick Method Eligibility: If using the Quick Method, confirm your revenue qualifies.

Why It Matters: Discrepancies can lead to CRA reassessments.

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4. Organize Expense Receipts and Documentation

The CRA requires receipts for all claimed expenses.

Key Checks:

• Digitize Paper Receipts: Use apps like Xero or QuickBooks to store records securely.
• Categorize Expenses Correctly: Separate personal and business costs (e.g., home office, vehicle use).
• Verify Meal/Entertainment Claims: Only 50% of eligible expenses are deductible.

Why It Matters: Missing receipts can disallow deductions during audits.

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5. Assess Capital Asset Purchases (CCA)

Did you buy equipment, tech, or vehicles this year? Claim Capital Cost Allowance (CCA) deductions.

Key Checks:

• Classify Assets Correctly: Computers (Class 50: 55% CCA) vs. office furniture (Class 8: 20% CCA).
• Track Disposals: Remove sold/discarded assets from CCA claims.

Why It Matters: Maximizing CCA can reduce taxable income.

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6. Review Home Office Deductions

If you work from home, claim eligible expenses.

Key Checks:

• Calculate Proportional Use: Deduct a percentage of rent, utilities, and internet based on workspace size.
• Simplify With the Flat Rate Method: Claim $2/dayupto$500/year without receipts.

Why It Matters: Overclaiming can raise red flags; underclaiming leaves money on the table.

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How KKCPA Can Help

Tax season is complex, but you don’t have to navigate it alone. At KKCPA, we help Ontario small businesses:
✔️ Reconcile financial records and correct errors.
✔️ Optimize payroll, GST/HST, and expense claims.
✔️ Maximize deductions while ensuring CRA compliance.

Contact us today to schedule a pre-filing review and file with confidence!

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Stay tuned for Part 2, where we’ll cover tax credits, installment payments, and last-minute filing strategies.