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Accounting and bookkeeping are two jobs, and Canadian small businesses often need both. Bookkeeping records every transaction as it happens. Accounting takes those records at year end, prepares the statements and tax returns, and tells you what the numbers mean. A corporation’s T2 return is due six months after year end, so the books have to be ready well before that.
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. We haven’t confirmed who is allowed to prepare or sign off on which statements, so ask any provider what credentials they hold.
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. 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 our own blended Ontario rate for a calendar 2026 year, since the province cut its small business rate on 1 July 2026. Ontario doesn’t publish the blend, so treat it 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 |
What can you not compare online?
Prices, packages and reviews. We didn’t find fee levels we could confirm, and we won’t quote any. 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.
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 keeping records, both read on 30 September 2026. The tax amounts come from the calculators on this site using 2026 rates. We don’t speak for the CRA, and we don’t have a view on any named provider.
Frequently asked questions
What is the difference between accounting and bookkeeping?
Bookkeeping records transactions as they happen. Accounting uses those records to prepare statements and tax returns and to advise on decisions.
Do I need both for a small business?
Many owners do, since someone must keep the daily records and someone must prepare the year-end returns. In a very small business, one person may do both.
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.
How long must I keep business records?
The CRA's general rule is six years from the end of the last tax year the records relate to. Early destruction needs the CRA's written permission.
What does it cost to hire one?
We couldn't confirm fee levels, so we don't quote any. Ask for a written scope of work before you compare prices.
- 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
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.