Half the year is a good place to stop and look. Problems found in June are small. The same problems found in April are expensive, because by then you are also trying to file.
Work through these in order. For most small service businesses the whole thing takes an afternoon.
1. Reconcile every account to the end of last month
Start here, because nothing else is trustworthy until it is done. Every business chequing account, every credit card, and any line of credit the business uses. The closing balance in your books should match the closing balance on the statement exactly.
If it does not, the gap is usually a duplicate, a missing transaction, or something entered against the wrong account. Find it now, while you can still remember the transactions.
2. Clear out the uncategorized pile
Every set of books has one, whether it is called Uncategorized, Ask My Accountant or Suspense. Empty it. Anything you genuinely cannot identify, go and find the receipt or the email now rather than in nine months.
3. Check that receipts are actually attached
Pull your expense report for the year so far and spot check twenty of the larger items. Does each one have a document attached? The CRA expects supporting records for six years, and a bank line on its own usually will not carry an expense through a review.
Pay particular attention to anything paid in cash, anything over a few hundred dollars, and anything that could reasonably be questioned as personal.
4. Add up four quarters for GST
If you are not registered, total your taxable revenue across the last four consecutive calendar quarters. If that number is over $30,000, you are no longer a small supplier and you need to register.
Also check each quarter on its own. Crossing $30,000 inside a single quarter ends small supplier status immediately, from the day of the sale that took you over.
If you are already registered, confirm you have been charging at the right rate for where the sale was made. GST is 5 percent in Alberta. Sales into Ontario or the Atlantic provinces may be HST at a higher rate depending on the place of supply rules.
5. Confirm the GST you have collected is actually set aside
This is the one that causes real cash flow pain. The GST you charge is not your money. If it has been sitting in your operating account funding day to day costs, the remittance will hurt.
Work out what you have collected so far this year, subtract the input tax credits you are entitled to claim on business purchases, and check that the difference exists somewhere. If it does not, start moving it into a separate savings account every time you get paid.
6. Look at your receivables
Which invoices are unpaid, and how old are they? Anything past sixty days needs a follow up this week. Anything past ninety needs a decision about whether it is going to be collected at all.
It is far easier to chase an invoice from May in July than it is to chase it the following spring.
7. Review categories for drift
Look at your expense accounts and ask whether any of them have quietly become a dumping ground. Also look for near duplicates that crept in, where the same kind of purchase is landing in two different places depending on how the description was worded.
Fix the categories now so the second half of the year is consistent with the first.
8. Estimate what you owe
Take your income less expenses for the year so far and get a rough sense of the tax on it. It will not be precise, and it does not need to be. The point is to know whether you are setting aside enough, while there are still six months to adjust.
Self employed filers have until June 15 to file, but any balance owing is due April 30. That gap catches people out every year.
If the list feels overwhelming
That usually means the underlying setup is doing you no favours, not that you are bad at this. A system built properly makes a mid year review routine rather than a rescue operation.
The DIY Bookkeeping Setup and Training Package covers the setup and the training, so you can run this checklist yourself in an afternoon.
This article is general information, not tax advice. Confirm your own situation with the CRA or your accountant.
