Year-End 2025 Wrapped: Final Checklist Before Filing Your Business Taxes

Tax season is here, and if you're a small business owner in Ontario, the next few weeks are crucial. Before you (or your bookkeeper) can file your 2025 business taxes, you need to make sure your books are accurate and complete.

Missing expenses means paying more tax than you should. Incorrect records can trigger CRA reviews. And incomplete books mean you don't actually know how your business performed last year.

Here's your essential checklist to wrap up 2025 properly:

1. Reconcile All Your Accounts

Go through every bank account, credit card, and loan account your business uses. Make sure every transaction from 2025 is recorded in your books and that your bookkeeping balances match your actual bank statements as of December 31, 2025.

What to check:

• Compare your December 2025 bank statement ending balance to your bookkeeping software

• Look for any transactions that cleared in January 2026 but should be recorded in 2025

• Check for duplicate entries (this happens more often than you'd think)

• Verify that all bank fees, interest charges, and automatic payments are recorded

• Review any outstanding cheques that haven't cleared yet

This isn't just good practice—it helps catch errors, missing transactions, and potential fraud before they become problems with CRA. I've seen businesses miss thousands in deductions simply because transactions weren't properly recorded.

Pro tip: If your accounts don't reconcile, don't just add a "balancing entry" to make the numbers work. Find the actual discrepancy. Those mystery differences often reveal missed income or expenses.

2. Review Outstanding Invoices and Payables

Take a hard look at your accounts receivable and accounts payable. Are there invoices you sent in 2025 that still haven't been paid? Are there bills you received in 2025 but haven't paid yet?

For accounts receivable:

• Review your aged receivables report

• Determine if any invoices are uncollectible (you may be able to write them off as bad debts)

• Ensure all December 2025 sales are invoiced, even if you haven't been paid yet

• Check for any deposit or progress payments that need to be applied

For accounts payable:

• Look for bills dated 2025 that you haven't entered yet

• Check your email and physical mail for any late-arriving December invoices

• Review your credit card statements for business expenses you might have forgotten to record

• Don't forget about recurring expenses like software subscriptions or insurance

Both of these affect your 2025 tax return, even if the money hasn't changed hands yet (if you're using accrual accounting). Make sure they're all recorded properly. If you're on cash basis accounting, this matters less, but it's still important for accurate financial reporting.

3. Confirm All Receipts Are Recorded

This is where many small business owners leave money on the table. Go through your 2025 expenses one more time:

Business mileage:

• Do you have a complete mileage log for 2025?

• Does it include date, destination, business purpose, and kilometers for each trip?

• CRA requires contemporaneous records—a log created in January 2026 for all of 2025 won't stand up to scrutiny

• Calculate your vehicle expenses using the detailed or simplified method

Home office expenses:

• If you work from home, calculate the percentage of your home used exclusively for business

• Include your proportionate share of rent/mortgage interest, utilities, property taxes, insurance, and maintenance

• Keep floor plan measurements documented

Other commonly missed deductions:

• Professional development courses, books, industry publications

• Software subscriptions and cloud services

• Bank fees and merchant processing fees

• Professional association memberships

• Business insurance premiums

• Meals and entertainment (remember, only 50% is deductible in most cases)

• Office supplies purchased in late December

• Domain registrations and web hosting

• Advertising and marketing costs

• Legal and accounting fees

If you bought it for your business in 2025 and have a receipt, it should be in your books. I regularly find clients who've missed $2,000-$5,000 in legitimate deductions simply because they forgot to record them.

Important: Make sure you actually have the receipts. CRA can ask for proof of any expense, and "I know I bought it" isn't sufficient documentation.

4. Double-Check Payroll Remittances

If you have employees, confirm that all your 2025 payroll remittances to CRA were made correctly and on time. This includes CPP, EI, and income tax deductions.

Review these items:

• Were all remittances made by the 15th of the month following the pay period?

• Do your total remittances match what was deducted from employee paychecks?

• Are employer portions of CPP and EI calculated correctly?

• Did you account for any pay raises or bonuses when calculating deductions?

• Are there any penalties or interest charges from CRA for late remittances?

Also remember: T4s must be issued to employees by February 28, 2026, and your T4 Summary must be filed with CRA by the same date. Don't wait until the last minute on this—get them prepared early so employees can file their personal taxes.

Contractor payments: If you paid any contractors $500 or more in 2025, you'll need their business information ready for potential T4A filing. Make sure you have their business numbers on file.

5. Review Capital Asset Purchases

Did you buy equipment, vehicles, computers, furniture, or make leasehold improvements in 2025? These are capital assets, and you can't deduct the full cost in one year—you claim Capital Cost Allowance (CCA) instead.

What qualifies as a capital asset:

• Vehicles

• Computer equipment and software (over a certain threshold)

• Office furniture and fixtures

• Manufacturing or trade equipment

• Buildings or leasehold improvements

• Signage

Make sure these purchases are recorded separately from your regular expenses so they can be depreciated properly. Each type of asset has a different CCA class and rate—computers depreciate at 55%, most vehicles at 30%, furniture at 20%, and so on.

Accelerated Investment Incentive: Many capital assets purchased in 2025 may qualify for accelerated CCA, letting you claim more depreciation in the first year. This is a significant tax benefit, but only if the assets are properly categorized.

Also note: If you bought a vehicle over $36,000 (before taxes), there are special luxury vehicle rules that limit your CCA claim.

6. HST Collected and Paid

If you're registered for HST, make sure all the HST you collected from customers and all the HST you paid on business purchases is recorded accurately. Your final HST return for 2025 needs to match what's in your books.

Check these items:

• Are you charging HST at the correct rate (13% in Ontario)?

• Have you recorded all HST you paid on business purchases as Input Tax Credits (ITCs)?

• Did you charge HST on all applicable sales (including digital products/services)?

• Are there any exempt or zero-rated sales that shouldn't have HST?

• If you use the Quick Method, are your calculations correct?

Common HST mistakes I see:

• Claiming ITCs on meals and entertainment at 100% instead of 50%

• Not claiming ITCs on legitimate business expenses

• Forgetting to charge HST on deposits or progress payments

• Incorrectly handling HST on cross-border transactions

If your HST doesn't reconcile properly, it creates problems not just for your HST filing but also for your income statement and tax return.

7. Review Inventory (If Applicable)

If you sell physical products, you need an accurate count of inventory on hand as of December 31, 2025.

Why this matters:

• Inventory affects your Cost of Goods Sold

• COGS directly impacts your net income and tax liability

• Overestimating inventory = paying more tax

• Underestimating inventory = potential problems if CRA reviews your return

Do a physical count if you haven't already, and make sure your inventory valuation method (FIFO, average cost, etc.) is consistent with prior years.

8. Consider Year-End Tax Planning Moves

Some tax planning strategies can still be implemented even though 2025 is over:

RRSP contributions: You have until March 3, 2026 to make RRSP contributions that count for your 2025 personal tax return. If your business had a strong year, maxing out your RRSP can reduce your personal tax bill significantly.

Salary vs. dividend decisions: If you're incorporated, the mix of salary and dividends you take affects both corporate and personal taxes. This is a complex calculation that depends on your specific situation—it's worth discussing with a tax professional before finalizing your 2025 compensation.

Bad debt write-offs: If you have outstanding invoices from 2025 that you've made reasonable efforts to collect but are truly uncollectible, you can write them off as bad debts.

Final Thoughts

Getting your year-end right means getting your taxes right. It also means you'll have accurate financial statements that actually show you how your business performed in 2025—information you need to make smart decisions for 2026.

Your financial statements tell you:

• Which products or services were most profitable

• Where your money is actually going

• Whether your pricing is sustainable

• If you're ready to hire, invest, or expand

But only if the numbers are accurate.

If you're feeling overwhelmed or unsure about any of these steps, that's completely normal. This is exactly what bookkeepers and tax preparers are here for. Getting professional help now can save you significantly more in taxes than it costs in fees—not to mention the peace of mind.

Need help wrapping up your 2025 books or preparing your taxes?

📧 Email: info@trustedbr.ca
📞 Phone: 1-800-655-4544
🌐 Website: www.trustedbr.ca
📱 Social: @trustedbr

Let's make sure you're not leaving money on the table this tax season.