Updated Checked by the Tax-Services.ca editorial team How we check
Basic bookkeeping means writing down every dollar that comes into the business and every dollar that goes out, with a receipt or invoice behind each entry. The CRA expects you to keep those records for six years from the end of the last tax year they relate to, so the habit you build now has to last.
What does basic bookkeeping include?
Three jobs, done every week if you can manage it. Record sales. Record expenses. Match both against your bank statement so nothing is missing. That’s the whole core.
Accounting is different. Bookkeeping collects the facts, and accounting reads them, prepares statements and plans around them. Most small owners do the first themselves and pay someone for the second once a year.
Pick one method and stick to it. A spreadsheet works for a one-person business with a few dozen transactions a month. Accounting software costs money but saves hours once you invoice regularly or charge GST/HST. We haven’t compared any products, so choose on how one fits your business.
What does a simple weekly routine look like?
Take Priya, who runs a small dog-grooming business out of a rented room. Every Friday afternoon she spends twenty minutes on the books. It’s boring, and it’s the reason she never panics at tax time.
- Enter the week’s sales and tick off the ones that have been paid.
- Enter each expense and attach the receipt, a photo is fine.
- Check the bank balance against what the books say.
- Note anything odd, like a payment you can’t explain, while it’s fresh.
Twenty minutes a week beats a whole weekend in April.
Which records do you have to keep?
The CRA says records must be detailed enough for it to work out what you owe and what you can claim. In practice that means the papers below.
| Record | What to keep |
|---|---|
| Sales | Invoices, cash register tapes, deposit slips |
| Purchases and expenses | Receipts, supplier invoices, contracts |
| Bank and card activity | Monthly statements, cheque stubs |
| Payroll | Pay records, T4 slips, remittance receipts |
| Summaries | Ledgers, journals, financial statements, filed returns |
| Computer records | Accounting files, point-of-sale data, online systems |
Electronic records count, and they must be kept too. The CRA also says you’re the one responsible for adequate records even when someone else keeps them for you. Keep them at your Canadian home or place of business unless the CRA has agreed to another place. The CRA’s page on where to keep records and for how long also explains how to ask permission to destroy them early.
How do you track GST/HST from the start?
If you charge it, put it in its own column. Never mix it into your sales figure. It isn’t your money, and your income is overstated if you count it.
Here’s the arithmetic in Ontario. A $2,000 job carries $260 of HST at 13%, so the customer pays $2,260. Your revenue is $2,000 and the $260 is owed on your GST/HST return. The GST/HST calculator adds or removes the tax for any province, which helps when a supplier gives you one total.
Filing dates depend on your filing period. Monthly and quarterly filers file and pay one month after the period ends, while annual filers have three months after the fiscal year end, according to the CRA’s 2026 deadlines page.
What can decent books tell you about tax?
A lot, and early. Say a sole proprietor’s books show $40,000 of net income for the year in Ontario. The self-employed tax calculator puts income tax at $4,221.13 and CPP at $4,343.50, about $8,565 together. If you knew that in July, you could set money aside instead of finding out in April.
The same numbers feed instalments, which the tax instalments calculator splits into four dates: March 15, June 15, September 15 and December 15. And if you hire, the payroll remittance calculator shows what an employee really costs you. For $3,000 paid every two weeks in Ontario, you remit $961.03 each period and the full cost is $3,228.41.
These are standard case estimates. They ignore expenses you haven’t recorded yet, which is the reason to record them.
Which bookkeeping mistakes hurt most?
Letting receipts pile up for months is number one. Once a receipt is gone, so is the deduction, and reconstructing a year from bank statements is slow work.
Number two is running personal purchases through the business account. It muddies every report, and you can’t tell if the business makes money. Give it its own account and card.
Third, throwing records out too early. Six years is the rule, unless the CRA gives written permission to destroy them sooner.
Last, not reconciling. If your books say $12,400 and the bank says $11,900, you have a $500 question. Find it now, while you can still remember the week it happened.
Sources, and how we checked them
Record rules come from the Canada Revenue Agency‘s guide on keeping records (RC188). Filing dates come from its 2026 tax deadlines page for businesses and the self-employed. Tax and CPP figures use 2026 federal and Ontario data in our calculators. This is an independent site with no tie to the CRA or any government.
Frequently asked questions
How long must I keep business records?
Six years from the end of the last tax year they relate to, unless the CRA gives you permission to destroy them earlier.
Is a spreadsheet enough for bookkeeping?
For a small business with few transactions, yes. Once you invoice often or charge GST/HST, software saves time.
Can I keep records only on a computer?
Yes, electronic records count, but you must keep them as carefully as paper and be able to produce them.
Where must I store my records?
At your Canadian home or place of business, unless the CRA has given permission to keep them elsewhere.
What is the difference between bookkeeping and accounting?
Bookkeeping records transactions. Accounting reads them, prepares statements and helps with tax planning.
- 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