Updated Checked by the Tax-Services.ca editorial team How we check
Yes. In Canada the law requires you to keep records of all your business transactions, so that you can support your income and expense claims. What the law doesn’t require is a bookkeeper or any particular system. Whether bookkeeping is mandatory for small businesses in Canada comes down to that difference: the records are compulsory, the person and the software are your choice.
What does the CRA actually require?
The CRA says you must keep records of every transaction that backs up your income and your expenses. It defines a record widely. An invoice, a bank statement, a contract, a receipt and a letter all count, on paper or in any other form.
It doesn’t say how to organize them. The CRA doesn’t issue record books and doesn’t suggest a type of book or set of books. A spreadsheet works. So does accounting software, as long as the records are complete and you can produce them.
Corporations and other structures may face extra record duties under company law and provincial rules. We didn’t check those, so ask your accountant or lawyer if you’re incorporated.
How long do I keep everything?
| Type of record | How long the CRA expects you to keep it |
|---|---|
| Most books, receipts and supporting documents | Six years from the end of the last tax year they relate to |
| Long-term acquisitions and disposals of property | Indefinitely |
| Share registry and other history affecting a sale, liquidation or wind-up | Indefinitely |
| Destroying records early | Only with the CRA’s written permission (Form T137) |
The six years run from the end of the last tax year the record relates to. A receipt from 2026 isn’t safe to bin until the end of 2032.
What happens if my books are a mess?
We couldn’t confirm a set penalty amount from the CRA pages we read, so we won’t quote one. What’s plain is the practical side. If the CRA reviews you and you can’t support a claim, the claim can be refused. You then owe tax on income you never got to keep.
Messy books also make your own decisions worse. You can’t tell whether a month made money. Take a sale of $1,000 in Ontario: with 13% HST the customer pays $1,130, and if you’re registered, $130 of that isn’t yours. Books that mix the two make you think you earned more than you did. The GST/HST calculator splits any invoice into price and tax.
When is bookkeeping worth paying someone to do?
Plenty of one-person businesses keep their own books for years without trouble, and you can do the same until the volume grows or a mistake starts to cost real money, which is usually the point where paying someone stops feeling like a luxury.
Payroll is the clearest case. With the calculator’s default case, one employee paid $3,000 every two weeks in Ontario, you hold back $732.62 from pay and add $228.41 of your own CPP and EI. That’s $961.03 to send in each pay period, on top of the wages you net out. The payroll remittance calculator shows how fast those amounts add up, and forgetting one is an expensive slip.
Other signs: you sell across provinces, you’re behind by months, or you can’t tell how much tax to set aside. The self-employed tax calculator gives a rough sense of that number, and the tax instalment calculator shows whether quarterly payments are likely.
As far as we could find, bookkeeping isn’t regulated the way the CPA designation is, so check what a person’s title is backed by. Ask what training and software they use, and ask for references. Our page on questions to ask when hiring an accountant works for bookkeepers too.
Common mistakes with business records
The biggest one is mixing personal and business money in one account. Every statement then needs sorting by hand, and each claim is harder to defend.
The second is keeping only bank statements. A line reading “Store 442, $86.10” tells the CRA nothing about what you bought or why. Keep the receipt or a photo of it.
The third is storing everything in one place, such as a laptop with no backup. Electronic records are fine, but they have to stay readable and be produced when asked.
The fourth is shredding after a few years by habit. Some records have to stay for good.
Where the numbers come from
The record rules come from the Canada Revenue Agency’s pages on business records and on how long to keep records. The payroll and HST figures come from the 2026 tax data behind our calculators. This site isn’t linked to the CRA or any government, and the CRA page is the last word on your own case.
Frequently asked questions
Do I have to hire a bookkeeper?
No. The CRA requires records of your transactions, but it doesn't require a bookkeeper or a particular type of books.
Can I keep my records in a spreadsheet?
Yes, as long as the records are complete, readable and can be produced when the CRA asks.
How long must I keep business records?
Generally six years from the end of the last tax year they relate to. Some records, like property purchases and the share registry, are kept indefinitely.
Can I throw records out early?
Only with the CRA's written permission, requested on Form T137.
Are bank statements enough?
Rarely. Keep the invoices and receipts that show what each payment was for.
- 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.