Short answer: First distinguish unreconciled books, unfiled returns and unpaid tax balances. Identify missing periods and government notices, then gather the records needed to assess the work. A filing deadline or notice may need attention before the full bookkeeping catch-up is complete.
The behind on books overview describes the catch-up and QuickBooks Online setup as a service. This guide walks through the actual sequence: what gets cleaned up first, how missing documentation gets handled, and what a shareholder loan cleanup looks like once the transaction history is sorted out. This same catch-up is often the first step when switching accountants mid-year, since a new accountant needs current numbers to work from, not just a filed prior-year return.
Identify the Three Separate Problems
Unreconciled books mean the transactions and balances have not been checked against statements. Unfiled returns mean a filing obligation remains outstanding, whether or not the books are current. Unpaid balances concern payment and interest even if a return has been filed. List each issue by period. If a government notice gives a response date, put that date at the top of the list and address it promptly.
Records to Gather Before a Review
- Bank and credit card statements for affected periods
- Sales invoices, agency remittances and expense receipts
- Prior T1, T2, GST/HST and applicable provincial returns and assessments
- CRA or Revenu Québec correspondence, especially notices with dates
- Payroll records, dividend records and shareholder transfers where applicable
- Current accounting software access or exports
Do not send sensitive tax documents through the public enquiry form. Teplov CPA can provide a secure follow-up process after the first contact.
Starting Point: Establishing the Last Clean Period
Before touching a single unreconciled transaction, the catch-up needs a starting point. That is usually the most recent period with a filed return that the books actually support, whether that is the last GST/HST filing that reconciled cleanly or the last fiscal year-end with completed financial statements.
The required start date depends on the last reliable records and the actual filing obligations. Earlier periods may need review if a missing return, notice or unsupported opening balance affects the current file. The Initial Review establishes that scope before cleanup work is agreed.
Bank Feed Reconciliation
The core of the catch-up is matching every transaction in the bank feed to a category, a vendor, and (where relevant) a project or GST/HST treatment. Months of unreviewed feeds usually contain a mix of straightforward transactions that categorize themselves once reviewed, and a smaller number that need judgment: a transfer that might be a shareholder draw, a deposit that might be a client payment or a refund, a charge that could be personal or business depending on what it actually was.
An agency deposit that does not match an invoice, or an owner withdrawal that was never classified, can change both the bookkeeping and tax work. Software may help organize the records, but bank statements and source documents still need to support the reconciled result.
Reconstructing Missing Receipts
A missing receipt is common in a catch-up and does not automatically disqualify an expense, but it changes how the expense is supported. CRA’s recordkeeping requirements generally call for supporting documentation for claimed expenses. Where the original receipt cannot be located, the practical alternatives are:
- Bank or credit card statements showing the vendor, amount, and date, which support the transaction occurred even without itemized detail
- Vendor account history or email confirmations, particularly for recurring software subscriptions and cloud services where the vendor often retains a billing history the contractor can pull directly
- Reasonable reconstruction from a consistent pattern, such as a monthly parking or transit cost that repeats identically across dozens of transactions
The strength of this support varies with the size and type of expense. A recurring $40 SaaS subscription may be easier to corroborate with vendor records than a large one-time equipment purchase. A bank charge alone may not establish what was purchased or whether it was a business expense.
GST/HST input tax credits need a separate documentation review. A bank statement may show that money left the account, but it usually does not show the prescribed invoice information required for the relevant purchase amount. In a catch-up, an expense may be supportable for income tax while the related ITC cannot be claimed without further documentation. The reconstructed file that results from this process is close to what a CRA review evidence package should look like if the return is ever selected for review.
GST/HST Catch-Up and the ITC Recovery Window
Overdue GST/HST filings can be time-sensitive, especially where tax remains unpaid or CRA has issued a notice. Interest generally applies to an overdue balance. The bookkeeping needs to be reliable before the return is prepared, since a late return filed on incomplete numbers risks needing a subsequent amendment.
Input tax credits missed in prior periods are not automatically lost. CRA’s general rule lets most registrants claim an ITC by the due date of the return for the last reporting period ending within four years after the period in which it could first have been claimed. Some registrants have a two-year limit. Eligibility, timing and documentation must be checked before including an older ITC in a return.
Shareholder Loan Cleanup for Incorporated Contractors
For an incorporated contractor behind on books, the shareholder loan account is usually the messiest single item once the bank feed is reconciled. Draws, personal expenses paid from the corporate account, and reimbursements that were never properly recorded all flow through this account, and a year or more of unreviewed activity can leave a balance that doesn’t match what actually happened.
The cleanup involves rebuilding the account from the reconciled bank feed: every draw, every corporate payment of a personal expense, and every properly recorded salary or declared dividend applied against the balance. Once rebuilt, review each advance under the shareholder loan rules. A debit balance does not, on its own, establish an income inclusion; the dates, underlying transaction and statutory exceptions matter.
Sequencing the Whole Catch-Up
In practice, the order that produces the fewest do-overs is:
- List affected periods, notices and immediate deadlines
- Reconcile the bank feed month by month from that point forward
- Reconstruct or flag missing documentation for expenses as they’re categorized
- Rebuild the shareholder loan account (incorporated contractors) once the bank feed is reconciled
- Review the tax treatment and prepare outstanding returns from supportable figures
- Address unpaid balances and establish ongoing bookkeeping controls
Skipping ahead, for example filing a GST/HST return before the bank feed for that period is fully reconciled, is the most common reason a catch-up produces an amendment shortly after it’s supposedly done.
What Prevents the Next Catch-Up
A catch-up that ends with the books current but no ongoing process just resets the clock until the next gap opens. The structural fix is a monthly close: bank feeds reviewed on a fixed schedule, GST/HST tracked as transactions are entered rather than reconstructed at filing time, and the shareholder loan account monitored throughout the year instead of at year-end. That is the ongoing part of what the behind on books service and the Run package are built to prevent, once the current catch-up is complete.
The Initial Review identifies missing work and helps set scope and fees. It does not itself promise completed cleanup or filing work; those steps require an agreed engagement. Penalty relief or a fixed completion date cannot be assumed from a general guide.
Request an Initial Review to describe the affected periods and any notice or deadline. Documents can follow through a secure process.