Financial statements for small Aldergrove corporations

Filings include T4 slips, Schedule 1 and Schedule 50.

Does a small corporation actually need statements?

Every corporation files a return with GIFI financial information: a balance sheet and income statement in prescribed codes. That is required. Separate financial statements with notes and an accountant’s communication are not.

Those are prepared for outside readers: a lender, lessor, passive shareholder, landlord, franchisor, bonding company or buyer. With no such reader, ask what they are for; formality nobody asked for is wasted money.

GIFI, the T2 and where the numbers come from

GIFI maps every ledger account to a prescribed code so returns are comparable. The mapping is only as good as the chart of accounts. A catch-all expense account maps badly and makes year-over-year comparison useless.

Setting up the chart of accounts properly is a one-time job that pays back yearly. The chart of accounts guide shows how to structure one.

The shareholder loan account on a small file

In a one- or two-shareholder corporation, the shareholder loan account collects loose ends: personal costs paid by the business, business costs paid personally, and cash drawn without deciding if it was salary, dividend or repayment. By year end, nobody can explain it.

Direction matters. Money the corporation owes the shareholder is a payable. Money the shareholder owes, unrepaid within the required period, can become personal income. Avoidable at year end; awkward two years on. See the shareholder loans guide.

Assets used for both business and personal purposes

Small corporations often own dual-use assets: a truck for jobs and the hockey rink, a shop with a personal corner, a home office. Each needs a defensible split, which affects both statements and tax.

A corporate vehicle available to the shareholder creates a taxable benefit under prescribed rules, a common assessment item. A home office supports a deduction under specific conditions. A mileage log and floor-area calculation beat a later estimate. See the company car benefit guide.

What a compilation engagement is

Formal statements for a small corporation are almost always a compilation under CSRS 4200: the owner's information properly presented, with a communication stating the basis and that no assurance is given.

It is not an audit or review. Nothing is verified: no bank confirmation, no receivables testing, no opinion. That suits a small company, but owners sometimes think the numbers were checked. A lender wanting checked figures needs another engagement.

A local CPA, working remotely

EverStone is a sole practitioner CPA firm with no Aldergrove location. Every engagement runs remotely through secure document exchange, video calls and electronic signature, so nothing depends on the short drive.

This suits incorporated trades and service businesses, small retailers, owner-operated shops, professional corporations and holding companies. The same person prepares the statements and the corporate return together, so a small file usually needs one round of questions, not four. Related pages: the Aldergrove small-business CPA page and the year-end hub.

Remote financial statement work

EverStone is a fully virtual, one-CPA firm, working with Aldergrove clients entirely online. There is no Aldergrove office and no local staff. Reviewing records through the year keeps the year end short.

Where a lender or an agreement calls for assurance rather than a compilation, the next question is assembling the working papers through the year.