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Choose accounting software by what it does with your GST/HST and your records, not by the brand on the box. The CRA expects your records kept for six years in a readable form, and that duty stays with you whatever the software does. A package such as FreshBooks is one example you can test against the checklist below.
What should accounting software do for a Canadian business?
Start with the tax basics. It should apply the right rate for your province and show the tax on each invoice. Try a sample. An Ontario invoice of $2,000 carries $260 of HST, for $2,260 in all, according to the GST/HST calculator, and your software should land on the same figures.
Then look at records. The CRA needs them kept where it can reach them, in a form its auditors can open, so the export matters more than the dashboard.
What does the CRA say about electronic records?
The CRA’s circular on electronic record keeping sets the ground rules. In plain terms:
| Point | What the CRA says |
|---|---|
| How long | Six years from the end of the last tax year the records relate to |
| Format | Accessible and readable, and the system must be able to export the information in a commonly used format that isn’t tied to one product |
| Backups | Rewritable media must be backed up, and restores should be tested |
| Where | At your business or home in Canada, unless the CRA agrees in writing to somewhere else |
| Who is responsible | You are, even if the software has flaws |
That last line is worth reading twice. A program that loses your data is still your problem.
Where are your files stored?
This catches cloud users out. When records sit on servers outside Canada, the CRA says it may accept a copy, as long as the copy is made available in Canada in a readable, usable format.
So ask the provider where your data sits. If the answer is vague, keep your own backup copy in Canada. Then try restoring from it once a year. The circular asks for periodic testing of backups, and an untested backup is only a hope.
Ensure that there is periodic testing of backed up records to verify that the backed up records can be restored into an electronically readable format.
Information Circular IC05-1, Electronic Record Keeping, canada.ca
Will it cover invoices, receipts and tax credits?
A GST/HST registrant has to hold documents that support each input tax credit. Depending on the size of the purchase, that can mean the supplier’s registration number, the tax amount, and a description of what you bought. Snapping receipts into the software is handy.
Whether the scan can replace the paper is a separate question. The CRA says that if you image paper records to the standards it names, the images become the permanent records and you can destroy the paper. A casual phone photo may not meet that standard, so ask the software maker whether its scans do, and until you know, keep the paper.
Take one purchase as a test: $200 in Ontario carries $26 of HST. Can you find the receipt, the tax and the credit in a minute? If not, the software isn’t saving you time.
Do you even need software yet?
Maybe not. The CRA treats you as a small supplier if your taxable sales stay at or under $30,000 in a single calendar quarter and over four consecutive quarters, and a small supplier doesn’t have to register for the GST/HST. Its page on who needs to register for GST/HST also says taxi and commercial ride-sharing drivers must register regardless.
A tidy spreadsheet and a folder of receipts can carry a very small side business for a while. Software starts paying for itself once you charge tax on every sale, track it on every bill, and need someone else to log in and check your work. Sam, running a weekend dog-walking business in Halifax, may be fine with a spreadsheet for a year.
What should you ask before you pay?
Prices and plans change often, and the vendor’s own page is the only place to trust for them, so none are quoted here. Ask each provider these questions, and get the answers in writing.
Can you export everything in a standard format if you leave, including old invoices? Which provincial taxes does it handle, including PST or QST if you sell there? Does it do payroll, or only invoicing? Where does the data live? Is there a free trial long enough to run a full month?
Also think about scale. A sole proprietor with $80,000 of net income pays $22,126.47 in income tax and CPP in Ontario, per the self-employed tax calculator, and can probably live with simple tools. If you pay staff, the payroll remittance calculator shows what a payroll run adds to your remittances, and you’ll want software that handles it. The profit margin calculator helps you judge what software is worth to you. Paying a few bucks a month is easy to justify. Paying for features you never open isn’t.
Where this information comes from
Record keeping rules come from Canada Revenue Agency pages, including its electronic records circular and its GST/HST registration page, read on 11 October 2026. Tax examples use the 2026 federal and Ontario rates in our calculators. This site doesn’t rank or price any product, and it has no link with the CRA or any software company.
Frequently asked questions
Does accounting software make me compliant with the CRA?
No. The CRA says you remain responsible for your records even if the software has flaws.
How long must electronic records be kept?
Generally six years from the end of the last tax year they relate to.
Can my records sit on a server outside Canada?
The CRA says records stored abroad don't count as kept in Canada, but it may accept true copies that it can read.
Is FreshBooks good for Canadian businesses?
We couldn't confirm any claims about a named product from an official source. Test it against the checklist above.
Can I throw away paper after scanning?
The CRA allows it if the imaging follows a Canadian standard and you keep a logbook.
- 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