If you feel like the time has been passing fast, you’re not alone! We’re already mid way through September, which means we’re waving goodbye to Q3 and saying hello to Q4. Which means it’s time to start the task of Q4 preparation!
To ensure you’re prepared to tackle your Q4 goals and responsibilities, we’ve compiled a short list of ‘to-dos’ to make sure you’re ending the year as successfully (and stress-free) as possible.
1. Prepare For Your Year-End Tax Submission
If your calendar year end is synonymous with that of your business’ financial year end, then part of your Q4 preparation will be collecting and submitting all necessary documents that your accountant will need in order to file your tax return.
Comb through your income, expenses, and invoices to ensure there are no inaccurate or missing details.
If you’re considered to be an incorporated company, you will need to file a T2 Corporate Return. You will also need to provide the CRA with the following information:
- Your bookkeeping records for the year. If your accountant is responsible for your bookkeeping throughout the year, or if they do your bookkeeping at year-end, then you’ll need to ensure that they have any and all invoices, receipts, and statements that have yet to be submitted.
- Income tax instalment assessments
- Notice of assessment
- Payroll records for all employees
- Your financial statements for the year, including income, cash flow, and balance sheets.
- Any assets that were added or disposed of during the year (land, property, equipment, etc.)
- Use-of-home details if your business is based out of your home.
- Motor vehicle expenses if you use your vehicle for work-related purposes. If you’re claiming this, you will need to provide a detailed mileage log.
If your business is considered to be a sole proprietorship or a partnership, you will need to file a T1 Personal Return. In addition to this, you will need to provide your accountant with not only your business information but your personal slips as well.
These include, but are not limited to, the following:
- T3 Slips (income from trusts)
- T4 slips
- T4A (commission slips)
- T5 (investment income)
- medical and dental receipts
- childcare expenses/receipts
- RRSP contribution
- donation receipts
Q4 preparation is the time to make sure that you have all your financial ducks in a row before your accountant submits your tax return. Ensure that you’re doing your due diligence to avoid any costly mistakes or penalties.
2. File Your GST Return And Prepare Any Amounts Owing
Whether you file your GST monthly, quarterly, or annually, it’s important to know your Q4 deadlines and pre-plan for them before they arrive. Trust us, it happens faster than you think – especially during an already hectic holiday season!
Any amount owing on returns that are filed monthly are due 1 month after the reporting period. For example, a November 1st-30th filing period means that the return is due December 31st.
GST that is filed quarterly that has any amounts owing are due 1 month after the end of the reporting period. For example, the due date for a July 1st – September 30th filing period would October 31st.
When GST returns are filed annually by a business that is not considered to be an individual, the amounts owing are due 3 months after the reporting period end date. For example, a July 1st – June 30th filing period means the return is due September 30th.
The only exception to this rule is if your business has a December 31st year-end date. Then the due date mirrors that of a self-employed individual. For more information on your GST deadlines, you can check out the Service Canada website here.
3. Plan For Gift Giving
Q4 contains the holidays so it’s smart to start pre-planning any gifts that you may want to give to clients and/or your staff. While some of these gifts are tax deductible, the amount deducted will vary depending on who you’re gifting to.
When gift giving to a client, keep in mind that entertainment and meals qualify as business expenses if they are purchased with the intent to either establish or maintain a business relationship.
For example, giving a client a gift card to a restaurant or tickets to the theater would qualify as gifting expenses – so you can deduct half their value on your tax return.
Gifts that qualify as an advertising or promotional expense are often fully deductible.
Gifting towards employees, however, is a little different. Business owners may give gifts to employees as long it’s for a special occasion. For example, the upcoming holiday in December would be suitable for gift giving.
Employee gifts are non-taxable if they are not cash or near-cash (such as a gift card).
If cash or near-cash gifting is the way you choose to go, you’ll need to report the gift on your employee’s T-slip as a taxable benefit. Be aware that your employee will pay taxes on this but, as an employer, a cash or near-cash gift can be written off as a business expense.
Whether you’re gifting to a client or your team, make sure to keep and submit all your receipts in case the CRA decides to audit your submission – this will ensure all your bases are covered from a taxation standpoint.
4. Prepare Your 2023 Cash-Flow Forecast And Budget
With 2022 quickly coming to an end, it’s time to start planning for the start of a brand-new year – and two items that cannot be overlooked when it comes to your Q4 preparation are a solid budget and cash-flow forecast.
A budget is a detailed outline of how your finances will be allocated over a certain time period. It includes estimates of revenue and expenses based on invoicing. Knowing where your resources are going will aid you in creating a projection for your profit throughout the year.
A cash flow forecast is a projection that details when income, expenses, receipts, and payments are likely to occur. Your forecast helps you plan and prepare for the financial obligations that are in your future.
Having both is a necessity for business owners to predict your likely profit for the coming year and when that will translate to money in the bank.
Want To Learn More? IAPC Can Help You Plan Your Q4!
Wrapping up Q3 and doing your Q4 preparation can be a hectic experience – and a stressful year-end isn’t on anyone’s ‘want’ list. If you have questions about your current financial situation, or need help planning for your deep-dive into Q4, contact us today. We can support you in turning your stressful year-end into a stress-free one.
