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Bookkeeping records every transaction as it happens, and accounting turns those records into statements, tax returns and advice once the year closes. Most small Canadian businesses need both. A corporation files its T2 six months after year end, so the books should be finished well before then.
What’s the difference between accounting and bookkeeping?
Think of bookkeeping as the daily part. Sales, purchases, bank matching, sales tax, payroll entries. Somebody has to do it every week or every month, and the person doing it might be you, a staff member or an outside bookkeeper.
Accounting is the yearly part. An accountant works from the finished books to prepare financial statements and the returns, and can advise on choices such as whether to incorporate. Who is allowed to prepare or sign off on which statements wasn’t confirmed here, so ask any provider what credentials they hold.
A rough picture: the bookkeeper is the one who keeps the shop’s receipts straight, and the accountant is the one who reads the whole year back to you once it’s over.
What should you hand over at year end?
A tidy handoff saves everyone time, and it’s the part you control. Here’s a plain checklist.
- Bank and credit card statements for every month, with reconciled balances.
- Sales and purchase invoices, plus the sales tax you collected and paid.
- Payroll records and your remittances to the CRA.
- Loan statements and any owner or shareholder loan activity.
- A list of big purchases with dates and amounts.
Keep the source documents, too. The CRA’s general rule is six years from the end of the last tax year they relate to, and it wants written permission before you destroy anything earlier.
Which numbers does the bookkeeping feed?
Everything on the tax side comes from your books, including the numbers on the T2 corporate tax return. Say an Ontario sole proprietor’s books show $120,000 of profit. The self-employed tax calculator gives $25,481.56 of income tax and $9,292.90 of CPP for the year, $34,774.46 together. Put the same profit in a corporation and the corporate tax calculator shows $14,035.20 of corporate tax.
That second figure uses a blended Ontario rate for a calendar 2026 year. The CRA lists Ontario’s small business rate as 2.2% from July 1, 2026, down from 3.2%, and says a year that spans that date is worked out by the days each rate applied. The blend is our own calculation, so treat the result as an estimate.
| Item | Where it comes from | Timing |
|---|---|---|
| Profit for tax | Income and expense accounts | Year end |
| Sales tax owing | Tax collected less tax paid | Per your filing period |
| Payroll remittance | Payroll register | On your remittance schedule |
| Corporate return (T2) | Financial statements | Six months after year end |
| Tax balance due | T2 estimate | Two months, or three for an eligible CCPC |
How often should the books be done?
Monthly is a good default. Our companion page on accounting and bookkeeping shows who does which job. Weekly suits a shop with lots of sales, and quarterly is the longest most people can get away with before things get fuzzy. The reason is memory, not rules. A $2,825 payment is easy to place the week it happens and nearly impossible nine months later.
Meet Dave, who runs a small renovation business in Red Deer. He used to hand his accountant a banker’s box every spring. Now he spends a Friday afternoon each month on the books, and the year-end job takes his accountant a fraction of the time.
What can you not compare online?
Prices, packages and reviews. No fee levels could be confirmed, so none are quoted. Two quotes rarely cover the same amount of work, so a low number can mean less. Ask for the scope in writing: which accounts, how many transactions, whether payroll and sales tax are in, and who signs the return.
A few questions worth asking before you sign. Do I own my data if we part ways? Who answers when the CRA writes? What happens to my file if you’re away? If someone can’t answer, that tells you something.
Common mistakes with books and accounts
Mixing personal and business spending is the classic. So is leaving the books until year end, when you can’t remember what a $2,825 payment was for. (On a $2,500 purchase in Ontario, the GST/HST calculator splits that into $325.00 of tax and the rest.) Another is treating a payroll bill as a surprise: one employee paid $3,000 every two weeks in Ontario means $961.03 to remit each period, per the payroll remittance calculator.
Also, don’t wait for the accountant to tell you the balance owing. Estimate it early so cash is there when the payment date arrives.
Official page on this topic: Canada Revenue Agency: Keeping records.
Where the numbers come from
Filing and payment timing come from the CRA‘s T2 corporation guide, and the record-keeping rules from the CRA’s page on where to keep records and for how long. The T2 timing was read on 30 September 2026, the record-keeping page and the Ontario rate change (CRA corporation tax rates page) in November 2026. The tax amounts come from the calculators on this site using 2026 rates. This site doesn’t speak for the CRA and has no view on any named provider.
Frequently asked questions
What is the difference between accounting and bookkeeping?
Bookkeeping records transactions as they happen: sales, purchases, bank matching and payroll entries. Accounting uses those finished records to prepare financial statements and tax returns and to advise on decisions such as incorporating. Both rely on the same books, so sloppy bookkeeping shows up as a bigger accounting bill.
Do I need both for a small business?
Many owners do. Someone has to keep the daily records and someone has to prepare the year-end returns. In a very small business one person can do both, often with software. Once you hire staff, incorporate or register for GST/HST, a year-end review by an accountant usually earns its cost.
When is a corporation’s T2 due?
Six months after the tax year end. The balance of tax is due two months after year end, or three months for an eligible CCPC that claims the small business deduction. For a December 31 year end that means filing by June 30 and paying by the end of February or March.
How long should I keep the source documents?
The CRA’s general rule is six years from the end of the last tax year the records relate to, and you need written permission before destroying them earlier. Keep them at your business or home in Canada unless the CRA agrees otherwise. Records of property you still own can need to be kept longer.
What does it cost to hire one?
We couldn’t confirm fee levels on an official page, so we don’t quote any. Ask each provider for a written scope that lists the accounts, the number of transactions, whether payroll and sales tax are included, and who signs the return. Compare quotes on what they cover, not only on price.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST