Updated Checked by the Tax-Services.ca editorial team How we check
For most Canadian small businesses, off-the-shelf accounting software is the sensible default, and custom software only makes sense when a real process can’t be bent to fit a packaged tool. Whichever you pick, the CRA rules on records are the same: six years of retention, and files that can be read by CRA software when an officer asks.
What does the choice really come down to?
Packaged software gets you started this week. Custom software gets you exactly what you specify, after you’ve specified it, paid for it and tested it. We couldn’t confirm any prices or build times for either route, because they vary by supplier and by scope. So this page sticks to the questions you can answer yourself.
Start with a blunt one. Can you describe, in a page, something your bookkeeping must do that a standard tool can’t? If you can’t, buy the standard tool. If you can, check whether a plug-in or a spreadsheet import solves it before you commission a build.
Which questions should you ask before choosing accounting software?
Use the table as a checklist for any package or any developer quote. The right column says why each one matters.
| Question | Why it matters |
|---|---|
| Can I export all my data in a readable format? | The CRA may ask for electronic records readable by its own software |
| Where is the data stored? | The CRA says records are kept in Canada unless it gives written permission to keep them elsewhere |
| Can I keep six years of history? | The general retention period is six years from the end of the last tax year |
| Does it handle GST/HST and payroll correctly? | A wrong figure in either costs you time to fix |
| Who fixes it when the tax rates change? | Custom builds need an owner for updates |
| What happens if the supplier disappears? | Your records must stay reachable |
The location row comes straight from the CRA’s page on where and how long to keep records. How that applies to a cloud product with servers abroad is a question for your accountant, and we haven’t tested any product against it.
How can you test accounting software before you commit?
Run a case where you already know the answer. Take a $500 sale in Ontario. HST at 13% is $65.00 and the total is $565.00, which the GST/HST calculator confirms. Enter the same sale in a trial file. If the software shows anything else, find out why before you trust it with a year of invoices.
Do the same for payroll. The payroll remittance calculator splits what you hold back from an employee from what you add as employer, and it gave us $961.03 to remit for one employee on its sample settings. A package that lands close to that figure on the same inputs is at least reading the rules correctly. A big gap means either different inputs or a problem.
Finally, check the income side. The corporate tax calculator shows $11,696 of tax on $100,000 of Ontario small-business income for calendar 2026, using a prorated rate blend. Your year-end tax estimate in any software should be in that neighbourhood for the same facts. If it isn’t, one of you is wrong.
When does custom software make sense?
Rarely, and mostly when you have unusual volume, unusual billing or a system you must connect to. It gives you control. It also gives you a maintenance bill and a single point of failure, because someone has to update tax rates each year, and rates move. If the developer leaves, your accounting leaves too.
A middle route is common: packaged software for the books, plus a small custom tool for the odd task that feeds it. That keeps the tax logic in a product that other people also test.
What does the decision look like for a real business?
Take Carole, who runs a small trucking outfit in Thunder Bay. She bills by the load, with a few odd surcharges, and thinks she needs custom software. So she writes the one-page description. Turns out the surcharges fit as line items in any packaged tool, and the only real gap is a nightly import from her dispatch spreadsheet, which a plain CSV upload handles. She buys the packaged tool, tests it on the $500 case, and saves herself a build she’d have regretted. Another owner, with a billing system that nothing off the shelf can read, would land on the other answer. The one-page test is what tells them apart.
Mistakes and limits to watch
Picking on price alone is the usual one, and it goes wrong in both directions, since a cheap package can cost you hours every month and an expensive build can sit half used. Skipping the exit test is another: before you sign, export a full set of records and open them in a spreadsheet. A third is trusting a demo. Demos use tidy data, and your books aren’t tidy.
Don’t scan your paper receipts and shred the originals until you’ve read the CRA’s conditions for keeping electronic copies instead. And remember that a package doesn’t file your return or make judgement calls for you. It records what you enter. Our calculators cover set cases, so treat every figure on this page as a check and not a filing.
We didn’t rate or rank any product, and we can’t say which one suits your firm.
Where we got these figures
The record retention, location and format rules come from the CRA guide RC188, Keeping Records and the Information Circular IC05-1, Electronic Record Keeping, read in November 2026. The tax figures come from our own calculators, which use published federal and provincial data. Ontario cut its small business rate from 3.2% to 2.2% on 1 July 2026 (see the CRA’s corporation tax rates page), so the 2026 figure is a day-weighted blend and an estimate. Carole is an invented example. No government body has reviewed or endorsed what you read here.
Frequently asked questions
Is off-the-shelf accounting software good enough for a small business?
For most small businesses, yes. Custom software only pays off when a real process cannot be handled by a standard package or an add-on, and then you take on the maintenance, the tax-rate updates and the risk that one developer holds the knowledge. Write a one-page description of the gap first and see if it survives.
Does the CRA accept electronic accounting records?
Yes, if they stay in an electronically readable form that CRA software can process and give enough detail to determine your tax obligations. Keep them six years from the end of the last tax year they relate to, in general. Keep the documentation that describes how your system works as well.
Can my accounting data sit on a foreign server?
Only with written CRA permission for electronic records kept outside Canada. The CRA’s circular says records stored abroad and reached online from Canada are not treated as records in Canada. Ask any provider where its servers are, get the answer in writing, and ask your accountant how it applies to you.
How do I test a package before buying?
Enter a case you can check, such as a $500 Ontario sale that should show $65.00 of HST and a $565.00 total, and compare the result with a calculator. Do the same with one payroll run. If the software shows anything else on the same inputs, find out why before you trust it with a year of invoices.
What should I do if I switch systems?
Export everything first and confirm that you can open it in a spreadsheet. Six years of records must stay reachable, counted from the end of the last tax year they relate to. Keep the old data readable until that period has run out, and note the dates you switched in your documentation.
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