Updated Checked by the Tax-Services.ca editorial team How we check
The most common bookkeeping mistakes in Canada are mixing personal and business money, skipping the bank match, leaving GST/HST out of the entries and losing the paper behind them. Most are cheap to fix if you catch them within a month, and expensive after a year.
Which bookkeeping mistakes cost the most?
Late payroll remittances, by a distance. The CRA’s page on when to remit payroll deductions sets the penalty at 3% for a payment 1 to 3 days late, 5% for 4 to 5 days, 7% for 6 to 7 days and 10% beyond that or when nothing is paid. Generally the penalty applies only to the part of the amount over $500, unless the failure was knowing or grossly negligent. A repeat failure in the same year can draw 20% if it was knowing or grossly negligent.
On one employee paid $3,000 every two weeks in Ontario, the payroll remittance calculator gives $961.03 per pay period. A month of that is about $2,082, and 10% of it is roughly $208 before the $500 allowance. Books that aren’t current are how a due date slips by.
The mistakes we’d check first
| Mistake | What it causes |
|---|---|
| Personal and business spending in one account | Expenses you can’t defend, and a messy year end |
| No bank reconciliation | Duplicates and missing deposits go unnoticed |
| Recording only the total on a taxable purchase | The GST/HST can’t be reported or claimed properly |
| Throwing out records early | No proof after an audit; the rule is six years |
| Books stored outside Canada | May not meet the records-in-Canada rule |
| No backup of electronic files | The CRA requires backups |
Are you getting the HST wrong?
It’s the mistake we’d bet on. A supplier bill for $565 in Ontario holds $500 of expense and $65 of HST. If you book the whole $565 as an expense and register for GST/HST, you overstate costs and lose track of the credit. If you’re not registered, the $565 is the cost.
The reverse HST calculator pulls the tax out in one step. Watch the province, though. Rates differ across the country, and some items carry only GST, so check the rules for your province before you trust one rate for everything.
Forgetting the return when nothing happened
A registered business files a GST/HST return for every reporting period, even with no sales. It’s due one month after the period for monthly and quarterly filers. Paper returns are out for periods ending in 2024 and later, and the CRA says paper filing draws penalties. People who go quiet for a quarter often forget this one.
Picture Marc, a Moncton contractor who has a dead winter and no invoices from January to March. The return for that quarter is still due, and a nil return takes five minutes online. Missing it costs far more.
The receipts problem
A missing receipt is a smaller problem than people think, if the bank record shows the payment and you can say what it bought. It’s a bigger problem when it happens on every purchase. Photograph the bill the day you get it. The CRA accepts imaged paper records and lets you destroy the originals once the images are kept properly, with backups. A phone photo in a folder named by month beats a shoebox every time.
The same goes for invoices you send. Number them, keep a copy, and mark them paid when the money lands. An unpaid invoice from last spring is either income you’re owed or a mistake in the books.
How do you tell if your books are drifting?
Three quick signs. The bank balance in your books doesn’t match the bank’s. The GST/HST you owe has no clear number behind it. Or you can’t say, without hunting, what last month’s biggest expense was. Any one of those means a catch-up session is overdue, and it’s far kinder to your weekend if you do it this month rather than in March.
Fixing a mess you already have
Don’t start with the oldest month. Start with this month, get it right, and then work backward, one month at a time. Match the bank statement first. Fill in the source documents next. Where a receipt is gone, ask the supplier for a copy and note what you did.
Late-filed or partly reconstructed years may call for help from a bookkeeper or accountant. That’s a job for a person who can read your actual files. If you’re self-employed, the self-employed tax calculator shows what your income should cost you, which is a useful check that your books look plausible. Treat its answer as a rough guide.
To keep the mess from coming back, see how to simplify your bookkeeping process, and how often to do it in the guide on bookkeeping schedules.
How we checked the figures
Penalty rates, filing rules and retention rules come from the Canada Revenue Agency‘s pages on remitting payroll deductions, GST/HST reporting and record keeping, read in September 2026. Examples come from this site’s calculators. This is an independent guide, separate from any government body.
Frequently asked questions
What is the most expensive bookkeeping mistake?
Late payroll remittances. The CRA penalty runs from 3% to 10% of the amount depending on how late it is.
Do I need to file GST/HST if I had no sales?
Yes. A registered business files for every reporting period, even a quiet one.
Can I mix personal and business spending?
You can, but you shouldn't. It makes expenses hard to defend, so use a separate account.
How long should I keep receipts?
Six years from the end of the last tax year they relate to.
What should I do if my books are months behind?
Get the current month right first, then work backward one month at a time, matching the bank statement before anything else.
- 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