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Startup funding bookkeeping comes down to labelling each dollar correctly: money from owners, money you owe back, and money you don’t repay each go in a different place. The CRA’s rule is the same whatever the source. Keep records that support every figure for six years from the end of the last tax year, and keep the share register for good.
What do lenders and investors ask to see?
Clean books, mostly. A lender wants to know you can repay, and an investor wants to know where earlier money went. Neither of them is impressed by a shoebox of receipts, however honest.
The usual pack is a set of monthly statements, the bank reconciliation behind them, and the agreements for every dollar raised so far. No official checklist for investors exists that we could find, so this comes from how the numbers must tie together, not from a rule.
If you’re applying for a government-backed loan, read that program’s own guidelines first. The Canada Small Business Financing Program page we read lists start-ups as eligible when gross revenues are $10 million or less, with a $1 million ceiling on term loans and $150,000 on lines of credit. Those limits can change, so confirm them on the program page before you plan around them.
How should each type of funding be recorded?
| Source | Where it goes | Keep on file |
|---|---|---|
| Owner or investor buys shares | Share capital, not income | Subscription agreement, share register |
| Bank or government-backed loan | Liability, with interest booked as it accrues | Loan agreement, payment schedule |
| Owner lends the company money | Liability to the owner, kept apart from share capital | Signed loan note, transfers |
| Grant or subsidy | Reduces the expense or asset it paid for, otherwise other income | Approval letter, conditions, claims |
| SR&ED claim | Follows the claim rules, see the CRA | Dated technical and financial records |
Share registers have no end date under the CRA’s retention rule, since they affect a later sale or wind-up. So does property bought with the money.
How long do you keep the records?
The CRA’s page on how long to keep records says you must generally keep required records and supporting documents for six years from the end of the last tax year they relate to. For a company with a December year end, a 2026 receipt stays until the end of 2032.
Funding paperwork is the stuff people throw out too soon. A closed loan feels finished, but the agreement still supports interest you deducted. Keep it.
A worked example with a loan and a grant
Say your Ontario startup borrows $50,000 for five years at 9%. That rate is just a round number for the example, not a quote. The loan calculator gives $1,037.92 a month and $12,275.07 of total interest.
In the books, each payment splits into principal, which reduces the liability, and interest, which is an expense. The bank statement shows only the total, so keep the schedule and split every month.
Now the startup spends $40,000 on equipment. The GST and HST calculator puts Ontario HST at $5,200, for $45,200 in all. A registrant claims that $5,200 as an input tax credit, and the CRA treats such credits as government assistance that reduces capital cost. A $12,000 grant for the same equipment reduces it again. You end up depreciating $28,000, not $45,200.
Sound fussy? It is a bit. But getting it wrong means claiming write-offs on money someone else paid.
What happens when the startup turns a profit?
The funding history follows you. Interest on the loan lowers profit, and share capital never does. On $100,000 of taxable business income in Ontario, the corporate tax calculator shows $11,696 for calendar 2026. Ontario cut its small business rate on 1 July 2026, so that is a prorated estimate, not a published figure, and a different year end changes it.
Paying yourself is a separate question. Salary sends you to payroll remittances, while a loan repaid to you is not income at all. Keep the two clearly apart, and use the payroll remittance calculator when you start paying wages.
Mistakes that hurt at the next funding round
Mixing personal and company money is the classic. If an owner pays rent on the company card, or the company pays a personal bill, the books need a clear record of which is which, or the next investor’s questions get awkward.
The other is treating a grant as sales. It isn’t revenue, and it can distort margins that a lender will look at. Book it as the CRA describes.
Records held on paper only cause trouble too. If you use a computer for your accounting, the CRA expects the books in a readable electronic form. Destroy nothing early without written permission on Form T137.
One more: a founder loan with no paper behind it. Months later, nobody can say whether the $20,000 that came in was a loan, a share purchase or a gift. Sign something the day the money moves.
Where this information comes from
Retention periods, the share register rule and T137 come from the Canada Revenue Agency‘s record-keeping pages. The grant treatment comes from its page on grants, subsidies and rebates, and the SR&ED record points from its claim guidance. Loan program limits are from the Innovation, Science and Economic Development Canada program guidelines as we read them. Calculator figures use 2026 federal and Ontario data and are examples, not advice. This site is independent and has no tie to the CRA or any government.
Frequently asked questions
Is investor money income for tax purposes?
Money paid for shares is share capital, not income. Loans are liabilities you record until they're repaid.
How long do I keep startup records?
Six years from the end of the last tax year they relate to. Share registers and long-term property records have no end date.
How do I record a grant?
The CRA says it reduces the expense or capital cost it paid for. If it can't be tied to either, it goes in as other income.
Do I need audited statements for a small raise?
We didn't find an official rule. Ask the lender or investor what they want in writing.
What do I need for an SR&ED claim?
The CRA says to keep dated technical and financial records that support the claim, since a lack of support can mean a partial or full disallowance.
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