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Small business bookkeeping comes down to one habit: record every sale, expense and tax amount when it happens, and keep the paper or file behind each entry. The CRA says most businesses must keep their records for six years from the end of the last tax year they relate to. Get that right and tax season is mostly a matter of adding up.
What does a small business have to keep?
The CRA wants accounting and other financial documents, and what counts depends on your business: your income, your expenses, any vehicles and your property. It also changes if you’re registered for GST/HST, have employees or sell online.
The format is up to you. Paper, electronic or a mix is fine, as long as electronic files are backed up. Scan the receipt if you like, but make sure the scan is readable.
| Question | What the CRA says |
|---|---|
| How long to keep most records | Six years from the end of the last tax year they relate to |
| Destroy earlier? | Only with the CRA’s permission |
| Records that may need keeping indefinitely | Long-term property purchases and sales, share registry, history affecting a sale or wind-up |
| Format | Paper, electronic or both, with backups |
Should I hire a bookkeeper or use software?
Volume decides it, and so does how much you hate the work. A sole proprietor with a few dozen transactions a month can manage in a spreadsheet or a basic app. Once you have staff, several income streams or GST/HST filings, the time cost climbs quickly.
We can’t tell you which product or firm is best, and we won’t pretend to. We couldn’t verify prices or feature claims for any of them. What you can check yourself is short: does it keep a full audit trail of changes, can you export everything if you leave, and does it show sales tax separately from income? Ask a firm for its fee in writing, and ask what happens to your files if you stop using it.
How do sales taxes change the books?
Tax you collect isn’t revenue. Take a $1,000 sale in Ontario. The GST and HST calculator shows $130 of HST, so the customer pays $1,130. Your income is $1,000, and the $130 is owed to the government if you’re registered.
In Alberta the same sale carries $50 of GST, for $1,050. In BC you’d add PST too, as our guide to British Columbia sales tax explains. Book the tax on its own line every time. Mixing it into sales is the fastest way to end the year with revenue you never really had.
What should the books tell you about profit?
Margin is the number people confuse. If an item costs $60 and sells for $100, the profit margin calculator shows $40 of profit, a 40% margin and a 66.7% markup. Margin is a share of the price. Markup is a share of the cost, so it’s always the bigger number.
That matters when you price. Add 40% to your cost and you don’t get a 40% margin. You get about 28.6%. Your bookkeeping should let you see the real margin by product or job, not a guess.
Where do bookkeeping mistakes come from?
Mostly from waiting.
Receipts pile up, memories fade, and a $200 supplier bill turns into “something in March”. Set a fixed weekly slot, even 30 minutes, and stick to it like a client meeting you can’t move.
Personal and business money in one account is next. It makes every entry a question. Open a business account, and pay yourself from it on purpose.
Payroll deserves its own line. Deductions you hold back from employees and the share you add are owed to the CRA, and the payroll remittance calculator gives an estimate per pay period. If the business is a corporation, the corporate tax calculator shows what the year’s profit is likely to cost in tax.
The last mistake is throwing things out early. Six years is the rule for most records, and some need to stay much longer.
Where do these numbers come from?
The record-keeping rules come from the Canada Revenue Agency’s pages on keeping records, read in September 2026. The tax and margin examples come from the calculators on this site. This website has no connection with the CRA or any other government body.
Frequently asked questions
How long must I keep business records in Canada?
The CRA says six years from the end of the last tax year they relate to, unless it gives permission to destroy them earlier.
Can I keep records electronically?
Yes. The CRA accepts paper, electronic or a mix, and expects backup copies of electronic files.
Which records may need to be kept longer?
Records on long-term purchases and sales of property, the share registry and history that affects a sale or wind-up of the business may need to be kept indefinitely.
Is sales tax part of my income?
No. GST/HST you collect is owed to the government if you are registered, so record it on its own line.
How do I choose a bookkeeper or software?
We could not verify prices or features for any product. Check for an audit trail, easy export and separate sales tax reporting, and get fees in writing.
- 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.