Taxes punish the unprepared, not the unlucky. I learned that the hard way years ago when a manufacturing client in south London let a profitable year run right into a surprise tax bill and a cash crunch. The profits were real, but the planning came too late. They had to scramble with a suboptimal bonus accrual and a rushed asset purchase that never delivered the returns they expected. It was preventable. A careful plan in the final quarter would have protected their cash and trimmed their tax bill without gimmicks.
If you operate a corporation in or around London, Ontario, your busiest season should start well before your T2 is due. A corporate tax accountant in London can’t turn back the clock in April. The right moves happen in October, November, and December, with your books current and your options still open. What follows is the year-end tax planning checklist I use with owner-managed businesses, tech startups, trades, professional corporations, and growing manufacturers across Middlesex County. Treat it as a working file you revisit each fall, with your accountant London Ontario side by side and your bookkeeping London Ontario team on pace with reconciliations.
Set the stage with clean books and a mid-year forecast
Good year-end planning starts with accurate numbers. Before you can lower tax, you need to know what you might owe. That means current bookkeeping, bank reconciliations to the end of the last month, vendor statements matched, payroll year-to-date checked, and a working trial balance that matches reality. In my practice, I push clients to run a mid-year forecast every September. We project revenue, margins, and overhead through year-end, then we test what happens under a few scenarios: a strong December, a flat finish, or a delayed contract. That range of outcomes directs the plan. Without it, you are flying blind.
This is also when a local tax service can be most helpful. A London ON accountant with direct knowledge of provincial incentives and common industry pitfalls will spot issues a generalized model can miss. For example, we see recurring problems with HST on intercompany transactions, or with incorrectly classifying contractors for payroll, both of which can erupt in audits later. A clean set of books now keeps your tax preparation London Ontario straightforward and your tax services London Ontario efficient.
Capital cost allowance and asset strategy
Asset timing frequently creates the biggest swing in taxable income. The rules for capital cost allowance (CCA) still provide a half-year rule in most classes, along with immediate expensing for certain assets, though the landscape has been evolving. The accelerated investment incentive that boosted first-year CCA has been tapering across classes, and immediate expensing for certain capital expenditures has limits and qualifications. The practical point is simple: before year-end, review your asset pipeline. If a key piece of equipment or a computer fleet refresh is imminent, confirm whether bringing it into use before year-end produces meaningful tax relief without pushing your cash flow off a cliff.
Not every purchase should be accelerated. I have seen businesses buy assets to save tax, then spend the next year regretting the interest cost and maintenance. Test the investment case first. If the asset will earn a return and you plan to acquire it anyway, you can let the tax tail help guide timing. If the asset is merely a tax-driven impulse, step back.
For real estate and leasehold improvements, the details matter. Leaseholds have their own class and are sensitive to when the space is ready for use. We once timed a clinic build so the client could capture first-year CCA while aligning with a lease-driven improvement allowance, improving both tax and cash position. That sort of coordination only happens when the accountant is looped in before drywall goes up.
Bad debts, inventory, and year-end write-downs
Write-offs are not a sign of failure, they are a sign of discipline. If a receivable is genuinely uncollectible and you have pursued reasonable steps, a specific write-off recognizes reality and lowers taxable income. Blanket provisions do not count. Your accounts receivable aging should be reviewed account by account. I encourage owners to document the story on each risky receivable: dates of contact, payment promises, legal steps considered. That memo supports the write-off if the file is reviewed later.
Inventory deserves the same discipline. Slow-moving or obsolete stock can be written down to net realizable value when specific and supportable. Retailers in London often carry seasonal items that lose value after the holidays. Manufacturers may hold parts tied to discontinued models. You do not need to wait for a fire sale. Your year-end valuation policy should reflect what a willing buyer would pay. If your bookkeeping team has never prepared a detailed inventory impairment schedule, ask your accountant to walk them through one. The tax benefit is only part of the reason. Clean inventory numbers sharpen your gross margin analysis for the next year.
Bonuses, dividends, and the personal tax mix
Owner-managers in Ontario juggle two tax systems. The mix between salary or bonus and dividends affects CPP contributions, RRSP room, corporate tax rates, and cash timing. In a profitable year, we often accrue a bonus before year-end, payable within 179 days after year-end, which allows the corporation to deduct it now while the owner recognizes it next calendar year. That spread can smooth cash flows and marginal rates. It is not automatic, though. You need payroll set up, a reasonable compensation level for the role, and proper documentation. Late payroll remittances are expensive mistakes.
Dividends remain an efficient way to extract surplus after corporate tax, especially where the small business deduction is fully available and the owner has low other income. The general corporate rate and personal integration do not always line up perfectly, and credits vary by province. It pays to run a two-year projection that considers your spouse’s income, RRSP contribution room, and any large life expenses on the horizon. A corporate tax accountant London team that also handles personal returns streamlines these decisions, and you avoid the familiar disconnect where the corporate side chases deductions while the personal side struggles with unexpected installments.
Small business deduction, associated corporations, and passive income traps
Ontario’s small business deduction reduces corporate tax on active business income up to the federal small business limit, subject to provincial mechanics. Two themes can trip up London area businesses. First, associated corporations share the small business limit. If you run multiple companies for liability or brand reasons, you still need to allocate the limit among them. Ignoring association can make your tax preparation London Ontario unpleasant when assessments arrive.
Second, passive investment income inside a corporation can erode access to the small business rate at higher levels. If your company has built up a portfolio of investments that generates substantial interest or dividends, the rules can grind down the small business limit the following year. The solution might be structural, such as moving investments to a holding company, or strategic, such as rebalancing the portfolio or paying dividends at the right times. These calls require careful modeling with your accountant London and a clear view of your risk tolerance.
Professional fees, prepaid expenses, and timing differences
Year-end is the right time to evaluate timing items. If you have to incur professional fees for regulatory compliance or planning, you can sometimes bring the work forward to accelerate the deduction, provided the services are rendered before year-end. Similarly, you should review prepaid expenses. Some prepaids are deductible as incurred, others must be amortized. I often see insurance, software licenses, and support contracts poorly categorized, which muddles tax and management reporting. It is not about chasing every dollar of deferral, it is about aligning expense recognition with economic reality and avoiding corrections later.
Charitable giving, sponsorships, and community ties
Many London businesses support local organizations, from Western University initiatives to youth sports. Charitable donations by corporations generate a tax credit, not a deduction, which can still present a valuable reduction of corporate tax. Sponsorships, when they deliver a clear business benefit such as advertising, are generally deductible as an expense rather than treated as donations. The distinction matters. If your logo placement is minimal and the benefit is intangible, you may be in donation territory. Document the business purpose for sponsorships, keep the contracts, and plan the timing. A December pledge that is not paid by year-end is not a donation for tax purposes. If community giving is part of your brand, sketch a two-year plan so you can match contributions to cash flow and tax forecasts.
Research credits, manufacturing incentives, and grants
Innovation credits and grants can change your tax story. The federal Scientific Research and Experimental Development (SR&ED) program remains available for qualifying projects, and Ontario has its own pieces in the mix. Proper documentation begins long before year-end: hypotheses, testing notes, failures, iterations. I have seen small manufacturers in the London area successfully claim credits for process improvements on the shop floor, not just lab work. If you leave this conversation to tax time, your file will be thin and your claim weak. Engage your tax accountant near me who understands SR&ED, and build the evidence as you go.
For manufacturers, review the classes for production and processing assets and any remaining acceleration https://judahgtos100.wpsuo.com/london-on-accountant-estate-and-trust-tax-basics opportunities. Provincial grant programs come and go. A good London ON accountant will maintain a calendar of relevant application windows for modernization funding and training grants. Even if a grant is not an immediate tax reduction, it influences the cash-and-tax math on capital projects and staffing.
Payroll, benefits, and owner insurance
Payroll services London are not only about T4s filed in February. Year-end is the moment to audit taxable benefits, car allowances, and shareholder loans. Automobile standby charges and operating benefits can surprise an owner who has access to a company car without tracking personal use. Cell phone reimbursements, home internet, and wellness perks also need consistent treatment. If your payroll platform does not reflect actual policies, fix the policies or the platform, preferably both.
On the owner side, critical illness, disability, and life insurance decisions should be made with tax in mind. Premiums for life insurance are generally not deductible, but insurance can play a role in buy-sell agreements and estate planning. If the corporation is the policyholder, beneficiaries, and any collateral arrangements with lenders must be mapped carefully. These are cross-disciplinary issues. I work with lawyers and insurance advisors for clients who need a coordinated plan that survives scrutiny.
Intercompany transactions, loans to shareholders, and related-party pricing
Shareholder loans that are not repaid on time can produce taxable benefits. Intercompany charges without clear documentation invite adjustments. I once untangled a web of management fees among three associated corporations that had drifted away from any defensible basis. We rebuilt the arrangements with simple service agreements and documented cost allocations. The tax savings came later, not from fancy rates, but from fewer errors and fewer auditor questions.
If you have a holding company, ensure upstream dividends and management fees are booked correctly and meet the requirements for tax-free intercorporate dividends where applicable. Track the eligible and non-eligible dividend balances if you are paying dividends to individuals, and keep your general rate income pool (GRIP) continuity up to date. A missed GRIP balance converts what could have been an eligible dividend into a higher-taxed non-eligible one, simply because the tracking was sloppy.
GST/HST accuracy and filing cadence
HST is not a tax planning tool, but errors in HST can make your corporate tax planning irrelevant. Before year-end, test your sales tax coding. Common pain points include mixed-use assets, meals and entertainment ITCs, and rebates on bad debts. Cross-border digital services, especially for tech firms billing U.S. clients from London, require careful evaluation of place-of-supply rules. If your business has grown beyond the cadence of quarterly filings, consider moving to monthly to smooth cash and catch issues faster. Accounting firms London Ontario that integrate HST reviews into their year-end process prevent costly assessments that land months after you thought you were done.
Owner remuneration and the lifetime capital gains exemption
If you own shares of a qualifying small business corporation, the lifetime capital gains exemption (LCGE) can transform how you think about building and exiting the business. Eligibility depends on asset tests over time, not just at the moment of sale. If an eventual sale is on your five-year horizon, start cleaning now. Move excess cash and passive investments to a holdco, document active business use of assets, and keep minute books current. These are not December projects, but December is a good time to look at your balance sheet and confirm you are trending in the right direction. A corporate tax accountant London with transaction experience can map the steps so you do not discover disqualifying assets right before a buyer appears.
Cash flow first, tax second
A tax plan that starves operations of cash is not a plan. Every tactic here should be tested against cash requirements for payroll, inventory purchases, and debt covenants. I have recommended clients skip an otherwise attractive deferral because a loan renewal was imminent and the bank preferred a stronger year-end. There is no shame in paying a bit more tax to keep lenders comfortable and suppliers paid. The right answer balances tax, cash, and risk.
If you are working with accounting firms near me that offer integrated advisory, ask them to overlay your budget with the tax plan. Tie each tax strategy to a cash impact and a date. For example, if you accrue a bonus, confirm when it will be paid, how installments will shift, and how your personal RRSP strategy aligns. Being explicit about dates prevents the March panic that turns smart plans into last-minute patches.
Technology, controls, and audit readiness
Modern accounting stacks can either clarify or obscure reality. Cloud bookkeeping tools, automated bank feeds, and payroll integrations are powerful when set up correctly. They also repeat small errors at scale. Year-end planning should include a control check: who approves bills, who releases payments, and whether vendor details are current. Fraud often hides behind weak vendor setups. Could your bookkeeper set up a fake vendor and pay it without a second set of eyes? If so, fix that now.
Audit readiness is not only for large companies. Keep a digital binder for each tax year: bank statements, credit card statements, AR and AP subledgers, inventory counts, asset additions with invoices and in-use dates, loan agreements, and key contracts. A tidy file shortens future audits and lowers your professional fees. It also helps if you change firms. A new London ON accountant can onboard faster when the last year is well packaged.
When to incorporate professionals beyond tax
Some year-end decisions spill into legal and HR territory. If you are adopting a new bonus plan, review the employment law implications. If you are altering your structure with a holdco or family trust, make sure your shareholders’ agreement, banking covenants, and insurance design follow suit. I have seen well-intentioned reorganizations stall loan renewals because the bank had not consented in advance. A quick call in November beats an apology in January.
A practical year-end working rhythm
Here is a simple rhythm that has worked for many of my clients across taxes London Ontario and income tax London Ontario planning.
- Early October: finalize year-to-date bookkeeping, run forecasts under three scenarios, and identify high-impact levers such as asset purchases and owner remuneration. Early November: lock decisions on bonuses or dividends, test HST coding, and review bad debts and inventory impairments. Early December: execute purchases that passed the ROI test, settle charitable contributions, and update intercompany agreements and payroll items. Mid December: confirm cash coverage for installments and source deductions, complete minute book updates for resolutions on bonuses and dividends. First week of January: capture final adjustments, lock the prior year in the accounting system, and set the filing calendar.
This is not about rigid checkboxes. It gives structure so your tax accountant London Ontario can bring their best advice before the window closes.
How a local team makes the difference
There is value in working with a corporate tax accountant London who knows the banks, the local CRA office habits, and industry patterns around the city. A contractor in St. Thomas with seasonal cash swings needs a different plan than a marketing agency downtown with steady retainers. Accounting firms London Ontario that pair tax with bookkeeping London Ontario and payroll services London keep the feedback loop tight. When your numbers move, your plan updates quickly, not at year-end.
For many owner-managed corporations, convenience matters. If you have searched for a tax accountant near me, you are balancing expertise with accessibility. A good local tax service shows up when you have questions about a sudden equipment failure, a landlord negotiation, or a potential acquisition, and they can get in a room with you and your banker when needed.
Red flags I watch for every year
A brief list of patterns that often lead to tax trouble or missed savings:
- Big personal charges buried in corporate expenses without clear shareholder loan tracking or taxable benefit treatment. Receivables that never move, with no collection action or write-off policy. Capital additions booked in lump sums without invoices, asset classes, or in-use dates, making CCA claims shaky. Large intercompany balances with no agreements or repayment plans. Dividend payments with no tracking of eligible vs non-eligible balances or GRIP continuity.
Each of these is fixable. The cost of fixing rises the longer they sit.
Bringing it together
Strong year-end tax planning is not flashy. It is a series of timely, well-documented decisions that suit your business, your family, and the year you just lived. It aligns what your books say with what is happening on the ground. It takes advantage of incentives when they support real investments and ignores shiny strategies that complicate life without strong returns.
If your checklist this year has drifted or your numbers feel uncertain, get help now. Whether you lean on an established London ON accountant, compare accounting firms near me, or bring a corporate tax accountant London into a specific mandate, do it while the calendar still has room. Solid planning protects profit, calms cash, and gives you a clean slate heading into the next quarter. That is worth far more than any single deduction.