Updated Checked by the Tax-Services.ca editorial team How we check
The main bookkeeping requirements in Canada: keep records that let the CRA work out your taxes, and keep them for six years from the end of the last tax year they relate to. That covers sales, purchases and payroll, on paper or electronic, held in Canada.
What records does a Canadian business have to keep?
The CRA defines records broadly: accounts, agreements, books, invoices, letters, statements, vouchers and anything else that holds information. In plain terms you need a running record of money in and money out, plus the paper behind each entry. Sales invoices, supplier bills, bank statements, payroll records and any contract that explains a payment all count.
What you keep depends on your setup. A sole proprietor, a corporation, a GST/HST registrant and an employer each have a slightly different list. The CRA’s records page sorts them by business type, so spend ten minutes on your own section. Picture Luc, who runs a small renovation outfit in Gatineau: he needs sales and purchase invoices, a payroll file for his two helpers, and his GST/HST returns, and his accountant’s year-end papers go in the same drawer.
Basic rules at a glance
| Rule | What the CRA says |
|---|---|
| How long | Six years from the end of the last tax year the records relate to |
| Where | At your place of business or home in Canada, or another place the CRA designates |
| Electronic records | Keep them in a readable electronic form for the whole period |
| Scanned paper | Accepted, and you may destroy the paper once it’s imaged properly |
| Backups | Encouraged for electronic files, ideally stored somewhere other than your main site |
| CPP and EI records | The six years start at the end of the calendar year |
Keep your records at your Canadian residence or place of business, unless you have permission from the CRA to keep them somewhere else.
Keeping Records (RC188), Canada Revenue Agency, canada.ca
Does it matter where the records are stored?
It can. The rule says books and records belong in Canada, and according to the CRA’s retention circular, records kept outside the country and reached online don’t meet that rule. That catches people who use a foreign server without thinking about it. If your software stores data abroad, keep a copy of the books in Canada, and ask the CRA if you’re unsure. The CRA’s circular on electronic record keeping says records kept outside Canada need written authorization.
Bookkeeping requirements when you have GST/HST or staff
Registration adds work. If you’re registered for GST/HST, you file a return for each reporting period, even when nothing happened, and returns are filed electronically for periods that end in 2024 and later. Your books have to show the tax you charged and the tax you paid.
Take a $1,000 sale in Ontario. HST is $130, and the customer pays $1,130. Your ledger needs the $1,000 and the $130 on separate lines. The GST/HST calculator does the split, and the reverse HST calculator pulls the tax out of a total: $565 becomes $500 plus $65.
Employers add payroll. You keep what you paid, what you held back and what you sent in. For one employee on $3,000 every two weeks in Ontario, the payroll remittance calculator puts the total to send at $961.03 per pay period. That number should match a line in your books, or something is wrong.
What does a simple setup look like?
It doesn’t need to be fancy. A business bank account and card that never touch personal spending. One folder per year, with a sub-folder for each month. Every sale and every bill entered within a week or two, and the bank statement matched to the books once a month. If you run payroll, one more folder for pay runs and remittances. That small routine covers most of what the CRA’s records pages ask of you, and it makes year-end a lot less painful.
What are the common gaps?
Few businesses fail on the big things. It’s the small holes that cost you.
- Throwing out receipts after a year because the return is filed. The six year clock is still running.
- Keeping a spreadsheet with no backup.
- Leaving out the paper that explains an odd entry, such as a loan agreement.
- Paying a personal bill from the business account and never noting it.
How detailed each entry needs to be is a separate question, covered in the guide on how detailed bookkeeping records need to be. Late payroll remittances carry penalties from 3% to 10% of the amount, which is the usual cost of books that fall behind. A $961.03 remittance that lands more than a week late draws the 10% penalty, roughly $96.
You can ask the CRA for permission to destroy records early. Unless you have a real reason, keep them the full six years.
Where this comes from
The retention period, storage rules and electronic record rules come from the Canada Revenue Agency‘s records pages and its information circular on books and records retention, read in October 2026. Tax and payroll examples come from this site’s calculators. No government body has reviewed or endorsed what you read here.
Frequently asked questions
How long must I keep business records?
Six years from the end of the last tax year they relate to. For CPP and EI records the six years start at the end of the calendar year.
Can I keep everything electronically?
Yes. The CRA accepts electronic records and imaged paper, and you must back the files up.
Do my records have to be in Canada?
Yes, at your business or home in Canada, or another place the CRA designates. Records only reachable online from abroad don't meet the rule.
Do I need accounting software?
Nothing we read requires it. A spreadsheet works if it's complete, backed up and readable for six years.
What if I'm a sole proprietor?
The same duty to keep records applies. The list of documents differs by business type, so check your own section of the CRA records page.
- 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