Year-End Tax Planning: 5 Moves to Make Before December

December has a way of sneaking up on business owners. Between wrapping up projects, planning for the new year, and managing the usual holiday rush, taxes may not be at the top of your list.

But waiting until tax season to think about your tax position can mean missing opportunities to plan ahead.

This fall, here are a few things worth reviewing with your accountant or financial professional.

1. Review Your Income for the Year

If your income has changed significantly this year, it may be worth looking at how that affects your overall tax position.

For business owners, this could mean reviewing your current revenue and expenses and considering whether income can be appropriately timed between tax years. Income smoothing can sometimes help avoid large swings in taxable income from one year to the next, depending on your circumstances.

The important thing is to look at the full picture before making any decisions—not simply try to push income into another year.

2. Look at Your Expenses Before December 31

Year-end is also a good time to review your upcoming business expenses.

Are there purchases you were already planning to make? Do you have outstanding expenses or invoices that need to be recorded? Depending on your business structure and the nature of the expense, the timing of certain purchases or expenses may affect which tax year they fall into.

That doesn't mean you should spend money simply to reduce your tax bill. A tax deduction isn't a reason to make a purchase your business doesn't actually need.

Instead, look at expenses you were already planning for and discuss the timing with your accountant.

3. Consider Your RRSP Contributions

For individuals and business owners who contribute personally to an RRSP, the end of the year can be a good reminder to review your contribution strategy.

Your RRSP contribution room, income, and overall financial situation will all affect whether making a contribution makes sense for you.

RRSP deadlines and contribution rules can also vary, so don't wait until the last minute to determine what applies to you.

4. Review Your Corporate Finances

If you operate through a corporation, your year-end planning may look different from that of a sole proprietor.

It may be worth reviewing your corporation's income, expenses, cash position, shareholder transactions, and upcoming financial needs before the year closes.

There may also be decisions around salary, dividends, or retaining funds in the corporation that should be considered as part of your broader tax and financial planning.

These decisions can have tax implications, so it's best to discuss them with your accountant before making changes.

5. Don’t Wait Until Tax Season

Perhaps the most important year-end tax move is simply starting the conversation early.

Your accountant can help you review your current financial position, identify potential tax considerations, and determine whether there are steps worth taking before December 31.

Tax planning is much more useful when it happens before the year is over—not after.

Get Ahead of Year-End

Every business and individual has different financial circumstances, so what makes sense for one taxpayer may not make sense for another.

At Onyx Accounting, we work with Canadian businesses and individuals to help keep their financial affairs organized throughout the year—not just at tax time.

Have questions about your year-end tax position? Contact Onyx Accounting before December to discuss your options and head into the new year with a plan.