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The right accounting package is the one that records your sales and expenses the way the CRA wants them kept, and that you’ll actually open every week. The CRA doesn’t require a specific system, and it accepts electronic records if they’re clear and easy to read. Xero is one well-known cloud package. We couldn’t verify its plans or prices, so treat this page as a checklist for any product you’re considering.
What does an accounting package have to do?
Three jobs. It records income with the date, amount and source. It records each expense with the date, the seller and what you bought. And it holds those records for six years after the last tax year they relate to, in a form you can still open then.
Everything else, from invoice reminders to pretty charts, is optional. Some of it is handy. None of it changes what the tax return needs.
Which features matter for a Canadian business?
Look at what your tax forms ask for, then check the software can produce it.
| You need | Check that the package |
|---|---|
| Expense categories that match form T2125 | Lets you rename or add categories, such as advertising, insurance, office expenses, professional fees |
| GST/HST tracking | Splits the tax from the price on each sale and purchase |
| Receipts for purchases | Stores a photo or scan next to each entry |
| Payroll, if you have staff | Handles it, or connects to a payroll tool you’ll use |
| Leaving later | Exports your data in a format you can read |
| Provincial taxes | Handles your province’s sales tax setup |
Is a spreadsheet good enough for a sole proprietor?
Often, yes. With a few dozen transactions a month, a spreadsheet does the job and costs nothing. The trouble starts when you invoice on credit, register for GST/HST or hire someone. At that point, software that matches bank lines to entries saves real time.
The CRA won’t tell you which to pick. It says only that the records need the right details. So the test is simple: could someone else read your file and rebuild your year?
How do you test an accounting package before you commit?
Enter one real month. Add ten sales, ten expenses and one purchase with 13% HST. Ontario HST on $100 comes to $13.00 in our GST/HST calculator, so the package should show $13.00 too. Then check whether the reports match your bank balance.
Also check the pricing page for what happens after a trial. We haven’t confirmed any provider’s price or discount, so read the current terms before you enter a card number.
Finally, see if it can show your profit the way you think about it. A product that costs $60 and sells for $100 has a 40% margin and a 66.7% markup, per our profit margin calculator. If your package can’t report that kind of thing, you’ll be doing it by hand.
When is it time to switch packages?
Switch when the tool costs you more hours than it saves, or when your business changes in a way it can’t follow, like a new province, staff on payroll or a move from sole proprietor to corporation. Don’t switch in the middle of a fiscal year if you can help it. December 31 is the usual year end for a sole proprietor, and a clean cutover on January 1 leaves you with one set of books per year instead of two that you have to stitch together at tax time.
What software can’t do for you
It can’t decide what’s deductible. A personal purchase entered as an office expense is still a personal purchase. It also can’t file for you unless the package says so, and even then the return is yours.
The self-employed tax calculator is a useful outside check: put in your year’s net income and compare the tax it shows with what your software’s report suggests. That tool leaves out GST/HST and EI, though, so don’t expect the two to match to the dollar. If you’re incorporated, the corporate tax calculator gives a rough corporate tax estimate. The Ontario small-business rate it uses for 2026 is a blend we derived, not a published rate.
For related reading, our guide to business bookkeeping lists what records to keep.
Where the numbers come from
Record rules come from the Canada Revenue Agency’s business records page, read in September 2026. The HST and margin figures come from our calculators.
Frequently asked questions
Does the CRA require a certain accounting system?
No. It doesn't require a specific one. Records can be electronic if they're clear and easy to read.
How long do I keep my accounting records?
At least six years from the end of the last tax year they relate to.
Can a spreadsheet be enough?
For a small number of transactions, often yes. It gets harder with credit sales, GST/HST or staff.
Are prices for accounting software listed here?
No. We couldn't confirm any provider's prices or plans, so read the current terms.
Will the software tell me what I can deduct?
No. You decide what's deductible, and the software records what you enter.
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- 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.