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Yes, the law requires you to keep records of all your business transactions so you can support your income and expense claims. It does not require 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 software are your choice.
What does the CRA actually require?
You must keep records of every transaction that backs up your income and your expenses. The CRA 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.
Records are anything that contains financial information such as ledgers, journals, financial statements, returns, correspondence, charts, and tables.
Keeping Records (RC188), Canada Revenue Agency, canada.ca
The CRA doesn’t say how to organize them, 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.
One more point that surprises people: hiring someone doesn’t hand the duty over. If a bookkeeper or accountant keeps the records for you, you’re still the one responsible for making sure they’re adequate.
Incorporated businesses have company-law record duties on top of this, such as a minute book, a share register and director records. Your lawyer or accountant can tell you what applies in your province.
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?
The CRA doesn’t attach one set penalty to messy books, so what you face is practical. 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.
The registration question matters here too. A small supplier, with $30,000 or less in taxable sales in any single quarter and over the last four quarters, doesn’t have to register for GST/HST. Once you go over that, you do, and your books need to show the tax you charge and the tax you pay from then on. Look at the CRA’s GST/HST registrant guide for the wording.
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.
Titles vary a lot, 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.
Leaving it all until tax time is another. Dana runs a small dog-grooming shop in Winnipeg and ends every March with a shoebox. Two hours a week in the spring would have saved her a weekend and probably a few bucks in missed deductions.
Where we got these figures
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 does not require a bookkeeper or a particular type of books. Many one-person businesses keep their own for years. Hiring someone does not hand the duty over, because you remain responsible for making sure the records are adequate.
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. The CRA does not say how to organize them or issue record books. Keep the invoices and receipts that support each line, and back the file up so one failed laptop does not erase years of proof.
How long do I keep business records?
Six years from the end of the last tax year they relate to for most books and receipts. Records of long-term property acquisitions and disposals, and share history affecting a sale or wind-up, are kept indefinitely. A receipt from 2026 is not safe to bin until the end of 2032.
Can I throw records out early?
Only with the CRA's written permission, requested on Form T137. Habit shredding after a few years is a common mistake, because some records have to stay for good. Ask before you clear out an old filing cabinet, and keep a note of what you destroyed and when.
Are bank statements enough?
Rarely. A line reading a store name and an amount tells the CRA nothing about what you bought or why. Keep the invoices and receipts, or a clear photo of them, that show what each payment was for. Statements are still worth keeping for the same six years.
- 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