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Cloud bookkeeping software keeps your books online, pulls in bank transactions and produces the reports your accountant needs. Xero is one example, and others work in similar ways. Which one suits you depends on how you sell, how much staff you have and which provinces you sell in. Whatever you choose, the CRA still expects your records to be readable for six years.
What should cloud bookkeeping software do?
We couldn’t confirm any product’s prices, features or rankings from an official source, so we won’t compare brands. Instead, here’s what to test in any free trial.
| Feature to test | What to look for |
|---|---|
| Bank feeds | Does your own bank connect, and do transactions arrive daily? |
| Sales tax | Can it handle GST, HST, PST or QST for the provinces you sell in? |
| Invoicing | Can you send and track invoices, including part payments? |
| Payroll | Is it built in, or do you need another tool? |
| Reports | Profit and loss, balance sheet, sales tax summary |
| Export | Can you download your full ledger in a readable file? |
| Access | Can your accountant or bookkeeper log in without sharing your password? |
How does bank reconciliation work?
Reconciliation means matching the software’s list of transactions to your bank statement, line by line, until the balances agree. It’s the step that catches a duplicated payment or a missing deposit.
Bank feeds do most of the typing. You still have to decide what each payment is. That’s where mistakes creep in, so plan a monthly session of half an hour rather than a yearly panic.
Does the software get the tax right?
Mostly, if you set it up right. The rate depends on the province of the sale and on your registration, and a wrong setting repeats on every invoice until somebody notices, which can take a full filing period.
Check a sample yourself. A $1,500 invoice in Ontario carries $195 of HST, for a total of $1,695, according to the GST/HST calculator. If your software shows something else, the tax code is wrong. Prices that already include tax can be split with the reverse HST calculator.
Payroll is a separate test. For one employee paid $3,000 per pay period in Ontario, the payroll remittance calculator shows $961.03 to remit, including a $228.41 employer share. Run the same case through any payroll tool you’re considering, and the totals should be close. If they aren’t, ask why.
What does the CRA expect of online records?
Keep records for six years from the end of the last tax year they relate to. Electronic records must stay in an electronically readable format for that time, even if you also keep paper copies. If the servers are outside Canada, you must be able to reach them, or have someone who can, and give the CRA the records it asks for. Don’t destroy anything early without the CRA’s written permission.
What follows for you is simple. Make sure you can export everything, and do it every year, in case you switch software or stop paying for it.
What mistakes do people make with online bookkeeping?
Unsorted transactions are the big one. A feed that fills up the ledger looks like progress, but it isn’t bookkeeping until each line has a category. The second mistake is choosing on a demo. Try your real bank and a real month of data.
Third, people forget about the numbers the software doesn’t cover. Say you’re self-employed with $80,000 of net income in Ontario. The self-employed tax calculator shows $22,126 of income tax plus CPP. Your bookkeeping gives you the profit figure, while the tax bill still needs setting aside from your own cash, and that calculator leaves out GST/HST and EI. For a corporation, the corporate tax calculator gives $17,544 on $150,000 of Ontario profit for a calendar 2026 year.
Where the numbers come from
The record-keeping rules and the GST/HST filing details come from Canada Revenue Agency pages, read in September 2026. Tax examples use the 2026 rates in our calculators. This page is independent. We have no link with any software maker or with a government body.
Frequently asked questions
Is cloud bookkeeping accepted by the CRA?
The CRA accepts electronic records if they stay readable for six years and you can give the CRA access when it asks. Check your software can export everything.
How do I check that the tax is correct?
Enter a sample sale for your province and compare the result with a calculator. A $1,500 invoice in Ontario should show $195 of HST.
What is bank reconciliation?
Matching the software's transactions to your bank statement until the balances agree. It catches duplicates and missing deposits.
Can my accountant see my books online?
Most packages let you invite a user with their own login. Test that before you commit, so you never have to share a password.
What if I want to switch software later?
Export your ledger, reports and sales tax history every year. We couldn't confirm what each product allows, so test the export in the trial.
- 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.