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Small business bookkeeping means writing down every dollar that comes in and goes out, and keeping the proof for six years. The CRA says that’s the minimum for most records, counted from the end of the last tax year they relate to. Get it right and your tax return takes an afternoon. Get it wrong and you pay tax on money you already spent.
What does small business bookkeeping actually cover?
Four jobs, and they repeat. You record sales. You record what you spend. You match both against your bank statement. And you set aside the sales tax you collected, since it was never yours.
The CRA doesn’t tell you which system to use. Paper columns, a spreadsheet and computer software all count, as long as the records are readable and organised. Its keeping records page puts it plainly: the documents must be kept organized. What it does say is that you must keep records of all your transactions so you can back up every income and expense claim. If you run two businesses, keep separate records for each.
Which records should you keep, and for how long?
| Record | What to hold on to |
|---|---|
| Sales | Invoices, receipts, till tapes, payment app reports |
| Purchases | Supplier receipts showing date, seller, buyer and a full description |
| Bank and card | Monthly statements for every account the business uses |
| Payroll | Pay records and remittance receipts, if you have staff |
| Sales tax | Returns and the paperwork behind each claim |
| Property and shares | Purchase and sale papers, often for much longer than six years |
Six years is the general rule. Records about long-term property, the share register or anything that affects selling or winding up the business can be needed indefinitely, according to the CRA. It can also tell you in writing to keep something longer. And if you want to destroy records early, you have to ask permission first.
One detail catches people at the till. A receipt for a purchase over $100 before tax should show the supplier’s business number if they’re a GST/HST registrant. Without it, you may lose the input tax credit.
What does a missed expense cost you?
More than you’d think.
Say you run a sole proprietorship in Ontario and your books show $65,000 of net income. The self-employed tax calculator puts income tax at $9,052.50 and CPP at $7,318.50, so $16,371.00 in all. You keep $48,629.
Now suppose $3,000 of genuine expenses never made it into the books. Your profit looks like $68,000, and the bill climbs to $17,527.40. That’s about $1,156 paid for nothing. It happens every year a shoebox swallows receipts, and nobody notices.
Two limits apply. The calculator leaves out EI and sales tax. It also takes your net figure as given, so it shows what bad records cost, not your final return.
When does a spreadsheet stop being enough?
Usually when you register for GST/HST or hire someone. The CRA treats you as a small supplier while your worldwide taxable revenue stays at or under $30,000, both in any single calendar quarter and over four quarters in a row. Go over, and you have 29 days to register. From that point every sale carries tax, and every purchase needs its own tax line.
In Ontario the HST is 13%, so a $100 job invoices at $113. The GST/HST calculator splits any price into the base and the tax, so run it before you build your invoice template. Keep the tax in its own account or column. Mixing it with your revenue is how a business ends up short on filing day.
Staff add another layer. Each pay period you owe income tax, CPP and EI held back from the employee, plus your own matching share. The payroll remittance calculator shows a $2,000 monthly wage in Ontario costs you $2,147.29 in total, with $391.82 going to the CRA. That’s the estimate, and your actual remittance depends on the employee’s claim forms.
Your pricing depends on clean numbers too. If your cost per item is $60 and you sell at $100, the profit margin calculator shows a 40% margin and a 66.7% markup. Those are two different things, and mixing them up is a classic pricing mistake.
What does a simple monthly routine look like?
Take Aisha, who runs a small bakery stall in Saskatoon. She doesn’t do bookkeeping on the fly, she does it once a month, on the same evening, with a coffee. It takes her about an hour.
- Drop every receipt, invoice and payment report into one folder or one tab, dated.
- Match each line against the bank and card statements, and flag anything that doesn’t line up.
- Move the sales tax collected into its own account, so it’s never mixed with spending money.
- Write one line on anything odd, such as a refund, a personal purchase or a cash sale with no receipt.
None of that is clever. The point is that a gap found in the same month is easy to fix, and the same gap found at tax time means guessing from memory.
Bookkeeping mistakes that come back to bite
- Paying yourself from the business account with no note. Draws aren’t expenses.
- Using one card for personal and business spending. Sorting it out in April is miserable.
- Keeping photos of receipts on a phone you might lose. Back them up.
- Waiting until year end. A monthly hour beats a weekend in March.
- Forgetting instalments. Once your tax owing passes $3,000, the tax instalments calculator shows the four payment dates, March 15, June 15, September 15 and December 15.
We couldn’t confirm what an outside bookkeeper charges, so we’ve left fees out. Ask for a quote in writing. And if you do hand the books to someone, you still own them. Ask to see the records every quarter, because the CRA will come to you, not to your bookkeeper.
Our sources
Record rules are from Canada Revenue Agency guidance on keeping records and sole proprietor records, read in September 2026. The $30,000 small supplier limit is from the CRA’s GST/HST registration pages. Tax figures use 2026 federal and Ontario schedules, and this site has no link with the CRA or any government.
Frequently asked questions
How long do I keep small business records?
Generally six years from the end of the last tax year they relate to. Records about property, shares or winding up a business can be needed longer.
Do I need bookkeeping software?
No. The CRA accepts paper books, spreadsheets and software if the records are readable and organised.
When must I register for GST/HST?
When your taxable revenue passes $30,000 in one calendar quarter or over four quarters in a row. You then have 29 days to register.
What does a receipt need to show?
The date, the seller, the buyer and a full description. Over $100 before tax, it should also show the seller's business number if they're registered.
Can I keep my records only in electronic form?
The CRA accepts electronic records. It also publishes separate rules on how to store and back them up, so read those before you scan and shred.
- 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