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Multi-entity bookkeeping in Canada comes down to keeping each legal entity’s books apart while using the same chart of accounts across all of them. Every corporation files its own T2 return, six months after its own year end. But associated corporations share one $500,000 small business limit, so the group’s numbers matter as much as each company’s.
Why does each entity need its own books?
Because each one is taxed on its own. A holding company, an operating company and a real estate company owned by the same person are three taxpayers, with three bank accounts, three sets of statements and three returns. Blending them into one file makes each return a guess.
Give every entity its own bank accounts and cards. Then give it its own payroll account if it has staff, and its own GST/HST account if it charges the tax. Records for each one are kept six years from the end of the last tax year they relate to, at a place in Canada unless the CRA agrees otherwise, as the CRA’s page on where to keep your records and for how long says. A dissolved corporation’s records stay for two years after dissolution.
How does multi-entity bookkeeping share one chart of accounts?
Use one numbering scheme everywhere. Rent is 6100 in the operating company and 6100 in the holding company. If it isn’t, a group report means a translation table and a lot of squinting.
Add a small set of accounts that exist for the group alone: amounts due from other entities, amounts due to them, management fees, and dividends between companies. Keep those separate from ordinary customer and supplier balances. Otherwise, a loan from the holding company looks like a customer who hasn’t paid.
How should you handle intercompany transactions?
Record both sides on the same day, with the same amount and the same description. If the operating company pays $20,000 to the holding company, the operating books show money out and a debt reduced, and the holding books show money in and a receivable cleared.
Then reconcile once a month. The balance owed by A to B should equal the balance B says A owes. When it doesn’t, one side missed a posting, and it’s much easier to find in October than in the following March.
Dividends between related corporations and any shareholder loans deserve a written note in the file saying what they were for. The bookkeeping is easy. Recalling the reason two years later isn’t.
What does a month-end close look like for a group?
Do it in the same order every time. Post and reconcile each entity’s bank accounts first. Next, match the intercompany balances pair by pair, and clear any difference before moving on. Then reconcile each sales tax account and each payroll account. Only after that do you pull the group report. Close the entities within a few days of each other if you can, because a gap of weeks is where mismatches hide. A checklist pinned to the first page of the file keeps the order even when a different person does the work.
What do associated corporations share?
| Item | Figure |
|---|---|
| Federal small business rate | 9% on the first $500,000 of active business income |
| Small business limit, associated group | $500,000 shared, allocated with a Schedule 23 agreement |
| Form listing related and associated corporations | Schedule 9 of the T2 |
| Ontario small business rate | 3.2% cut to 2.2% from 1 July 2026, blended to about 2.7% for a calendar 2026 year |
| GST/HST small supplier limit | $30,000, counting the revenues of associates |
Here’s why the table matters. Say two associated Ontario corporations each earn $400,000 of active business income in calendar 2026. If each could use its own $500,000 limit, the corporate tax calculator gives about $46,784 each, or $93,568 together. But the group has only $500,000 of low-rate room. Running $800,000 through the same maths, which uses the limit once, gives about $137,980, a gap of $44,412. Treat those as rough estimates: the Ontario rate is our own blend for the year, and the calculator splits the limit among associated corporations only if you fill in that box.
So your books need to show which companies are associated, and someone has to decide how the limit is split before any return is filed. The T2 itself is due six months after year end, with the balance owing due earlier, as the CRA’s T2 Corporation Income Tax Guide explains.
What breaks first in a group?
Intercompany balances that nobody owns, mostly. The accountant for company A closes on a Friday, the one for company B closes the following month, and the difference sits there for a year.
Software helps only if it lets one login handle several entities without mixing the ledgers. Test it with two dummy companies before you migrate anything. Then watch for shared payroll. If one company pays staff who work for another, the payroll remittance calculator shows the size of the cost, and you’ll want a management fee or a charge back on the books so it doesn’t look like a gift. The dividend tax calculator shows what an owner pays when profits leave the group.
Can one bookkeeper handle every entity?
Yes, and it’s often better, because one person sees both sides of each intercompany entry. The risk is the same person approving payments between companies they also record. Have an owner or a second person look at those transfers each month. Cheap to do, and it’s the first thing an outside accountant will ask about.
Where this information comes from
Federal rates, the business limit and the associated corporation rules come from the Canada Revenue Agency‘s corporation tax pages and the T2 guide. Record storage rules come from the CRA’s record keeping pages. The Ontario figure is the CRA’s 2.2% from 1 July 2026, blended by us for a calendar year, which the CRA doesn’t publish. How the limit is split depends on each group, and 2026 filing dates aren’t published beyond the six month rule. This site isn’t connected to the CRA or any government.
Frequently asked questions
Does each company in a group file its own T2?
Yes. Each corporation files its own return, due six months after its own tax year end.
What is Schedule 9?
It's the T2 schedule for related and associated corporations. You complete it if the corporation is related to or associated with another one.
Do associated corporations each get $500,000 at the small business rate?
No. The $500,000 limit is shared among the group and allocated with a Schedule 23 agreement.
How often should intercompany accounts be reconciled?
Monthly is a sensible habit. Each side should show the same balance and the same description.
How long do we keep the records of each entity?
Six years from the end of the last tax year the records relate to, and two years after a corporation is dissolved.
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