I took over a client and am catching up on the bookkeeping for the last 2 years.  They did not have a bookkeeper during this time, so for payroll, the owner was just writing himself a cheque for $2000 each month.  He roughly figured out what he would owe for payroll remittance and sent in the occasional cheque to Revenue Canada.  I have no idea how he did the calculations (obvsiously worked backwards to get a net amout of $2000).  I've just been entering the $2000 paycheques as an expense to the wages and salary expense account.  For the payments to CRA, I've just put them as prepaid expenses for now.

How would I go about reconciling this at year end?  To what account should I move the prepaid payments to CRA?   I have not found any paperwork yet from CRA regarding any reconciliation of his company account with them, nor do I know what he claimed on his income tax return.

His files are in disarray, so it's unlikely I'd get the info I'm looking for, so I'm going to have to wing it, but not sure how to go about it.

The first thing I would do would be to get the client to sign a T1013 and an RC59 authorizing me to represent him to the CRA and then once those have been filed and are on record with the CRA (about 2-6 weeks after submitting depending upon the time of year) I would get copies of all payroll remittances that they have received.

I would also ask both the client and the CRA for copies of his T4 slips and T4 Summaries for the years.

Once you have those and have done as good a job as possible of reconstructing the accounting records for the years you can do some comparisons between what CRA says has happened and what your client's records say has happened.

You will then be in a position to make any adjustments necessary.

If the client was not willing to give me the T1013 and the RC59 I would tell sorry I can't help you.