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Cloud-based accounting keeps one live copy of your books that you, a bookkeeper and your accountant can all open at once. The CRA still wants your records for six years from the end of the last tax year they relate to, so the real question is who holds that copy and how you’d get it back out if the provider vanished tomorrow.
What do you actually get from cloud-based accounting?
Mostly, you stop passing files around. Nobody emails a spreadsheet called “final v3”, and nobody has to work out afterwards which copy the accountant used when the return went in. Bank transactions arrive on their own, receipts can be photographed on the spot, and your accountant sees the same screen you do.
That’s the whole appeal, and for a small firm it’s plenty. Access from a phone helps when you’re on a job site. Automatic backups by the provider help too, though we wouldn’t treat them as your only backup.
What it won’t do is think for you. A transaction coded to the wrong account is wrong in the cloud as well.
Where should your records be kept?
This is the point most owners skip. The CRA says records belong at your residence or place of business in Canada, unless it gives you permission to keep them elsewhere. Its electronic record guidance adds that records kept outside Canada and reached by internet from Canada aren’t counted as records in Canada.
The CRA may accept copies, if they’re available in Canada in a readable format its officials can use. So the practical answer is simple. Ask the provider where its servers are, and keep your own export on a drive you control. We couldn’t confirm where any named product hosts its data, so ask for it in writing.
| CRA expectation | What to do with a cloud file |
|---|---|
| Keep records six years from the end of the last tax year they cover | Export before you cancel any subscription, not after |
| Records kept in Canada | Hold a full copy on your own device or a Canadian office |
| Usable format for CRA software | Export in a common format that other programs can open |
| Backups you can restore | Open one backup a year and check it works |
| Records available on request | Know who holds the admin login |
Does the software do the sums for you?
It does the adding. You still choose the inputs.
Take an Ontario business that sells $12,400 before tax in a month. The GST/HST calculator shows $1,612 of HST on that sale, for a total of $14,012. If your cloud file shows something else, the tax code on the sale is probably wrong.
Payroll is the same story. Three employees paid $3,000 every two weeks in Ontario mean $2,883.10 to remit each pay period in the payroll remittance calculator. That covers the tax and contributions held back plus the employer share. It’s a quick check against whatever the software produces.
For an owner with no staff, the self-employed tax calculator gives a rough yearly bill. On $80,000 of profit in Ontario it shows $22,126.47 of income tax and CPP. Expenses aren’t in that figure, so your books will move it.
What goes wrong when books move to the cloud?
A few things come up again and again.
- You pay for years, then find the export is awkward or partial.
- A former employee or a past bookkeeper still has a login.
- Bank feeds get accepted without a look, so personal spending sits in the business.
- Nobody keeps a copy outside the provider.
- The owner assumes the software files returns. It doesn’t, unless you set up a separate filing service.
Also, the CRA says you stay responsible for your records even when someone else handles them. A provider outage is your problem on audit day.
Where do these numbers come from?
The record rules come from the CRA guide on keeping records and its electronic record keeping circular. The tax and payroll figures are our calculators’ 2026 estimates, which use published federal and Ontario data. This site has no link with the CRA or any government.
Frequently asked questions
Is cloud-based accounting accepted by the CRA?
The CRA accepts electronic records if they stay readable and usable for its software and are kept as it requires. What it cares about is the record, not the tool that made it.
How long should I keep records after switching to the cloud?
Six years from the end of the last tax year they relate to, unless the CRA has agreed you can destroy them sooner.
Can my data sit on a server outside Canada?
The CRA says records kept outside Canada and reached electronically from Canada aren't counted as records in Canada. Keep a copy here and ask the provider where its servers are.
Does cloud software file my taxes?
Not by itself. It organizes the numbers, and you or your accountant still prepare and submit the returns.
What should I do before cancelling a subscription?
Export everything in a common format and check that the file opens. Do it before access ends.
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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.