It’s that time of year for Canadian businesses—when preparing your reports for year-end could be something you are, or probably should be, thinking about. Are you prepared for your Fiscal or Payroll Year-End?
Depending on your business structure, your company may or may not be closing its year in December, though many, if not most, do. Perhaps your business dots its ‘i’s’ and crosses its ‘t’s in March or April of each year.
In this blog we will take a look at what your Fiscal Year-End implies. We will provide you with some helpful resources and tips to help you stay as efficient and stress-free as possible while you get ready to streamline all those reports. We will also touch on what you may need to do to take care of your Payroll at year-end. If you are already a Spire (ERP) Accounting Software client, you will also find some helpful tips below.
First, What is a Fiscal Year-End?
Your Fiscal Year-End is also referred to as the tax year-end or financial year-end of your business activities. Your fiscal year-end is determined by your own company or business structure. In Canada, a business may select different fiscal year periods with approval from the Canada Revenue Agency (CRA). The Canadian Government itself runs its fiscal year from April 1 through to March 31.
Corporations can opt to choose the date of their fiscal year-end within 53 weeks of their incorporation date, while sole proprietorships and partnerships can apply to the CRA to change their fiscal year-end date (from January 1 to December 31).
Revenue Canada suggests that most businesses and self-employed individuals do end their fiscal period on December 31. However, if your fiscal year-end is not December 31, you can use this form: Form T1139, Reconciliation of Business Income for Tax Purposes, to calculate the amount of business income to report on your income tax return and request a different date for your year-end. However, it is important to note that there is no guarantee the CRA will approve your request.
Regardless of when you close your year, now is certainly a good time to start getting prepared and checking all those boxes to ensure you have everything in order when your year-end does roll around.
Preparing for Your Fiscal Year-End
Now, let’s have a look at preparing for your Fiscal Year-End using your ERP system. If you are working with Spire, you should know that at any given time, it keeps three years open: your last year, your current year and next year. Posts can be made into any of the last three years, at any time. However, once the last year has been closed, it will be archived to ‘History’ and further transactions from this point will not be allowed. Another important point to note: If your current year is not closed—but you continue to post into next year—you may be locked out of Spire once you cross the year-end for the upcoming year, until the current year has been closed.
Journal Entries & Backups
One of the first boxes you will want to check, is to make journal entries in Spire, including the recurring, correcting balances as necessary. You will also want to check off creating a backup of your data. Spire can be configured for automatic back ups of all your data. Once a backup (referred to as a ‘Snapshot’ in Spire) is completed, your data set should be kept in a secure place as it represents the entirety of your information.
Of course, it is crucial for you to back up your data in preparation for year-end. However, you may also want to consider the importance of creating a backup prior to importing new data, executing major updates to your software, running an inventory, or performing any major function affecting your data. If you are unsure of how to do a backup in Spire, you may want to consult Spire’s 3.9 Manual –
Or watch this video from Spire
Inventory & Follow ups
Taking stock, of course, is also a key step. In Spire’s Inventory menu you will find a feature called Inventory Reallocate. Run Inventory Reallocate to re-state on-order and committed quantities in your inventory. Ask yourself if a physical inventory is required. Verify that all items scheduled for shipping have gone out; see that all goods in transit are accounted for; ensure that all the invoicing has been done.
Post sales and purchases invoices also need to be categorized in the correct fiscal period. Do your subledgers (A/R, A/P and Inventory) balance with each of their control/special accounts? If in Spire your General Ledger, Purchases and Accounts Payables modules are integrated, you will want to verify that the Accrued Payables G/L account balances with the Accrued Payables Summary in Purchases.
When closing the year in Spire—you will want to consider locking closed periods. If you need help with the process, here is your step by step guide from Spire .
Another helpful practice is to print out physical copies of financial reports and verify balances. For a more detailed list of questions and procedures—please see the contact us.
Working With Your Accountant
Your CPA may need access to your General Ledger data to analyze and verify all your activities during the last fiscal year. If this is required, it can easily be exported. (Get help from Spire here).
Does your Spire trial balance match your accountants trial balance when the journal entries are included? You may also want to take the opportunity at this time to review your business’ tax strategies with your accountant.
Preparing for year-end is also a good time to prepare an annual budget, to set your goals for the upcoming fiscal year and include specific, measurable, achievable, relevant, and time-sensitive targets.
Preparing for Your Payroll Year-End
It is possible you may have to issue more than one type of return. Several types of slips and summaries such as for example: a T4 slip, a T4A summary or ; T5018 summary (statement of contract payments) may need to be completed for your payroll information returns, this will depend on the type of income you pay out.
Information on deciphering what must be filled out and by whom, what needs to be reported and when to issue different slips and summaries can be accessed on the Revenue Canada on this Government of Canada website.
Recommendations
Reviewing your list of requirements regularly in preparation for the fiscal year end. Some functions should also be completed monthly and/or quarterly as well as annually.
It is highly recommended that each business, enterprise, or company develop its own corporate year-end strategy and timeline. Consultation with a professional accountant, if you do not already have one on board, is also highly recommended to deal with the complexities, changes and questions that will likely arise year after year.
While you are steeped in verifying all your processes, checks and balances—it is a great time to investigate if a relevant Spire upgrade is available for you! This will help keep you up to date, efficient and moving forward. Again, please don’t hesitate to contact our experts, we’re here to help!
About Spire
Spire is an accounting and business management software that allows small to medium-sized businesses to have greater control over their day-to-day operations. This software is both scalable and contemporary. Spire can help you run a better business with a more efficient and accurate platform. It will make getting ready for your Payroll, Period and Fiscal Year-End, pain free.
Contact our experts at Cencomp – and try Spire for free!
