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The minimum bookkeeping requirements for a small business in Canada come down to this: keep records that show your income and expenses, keep the papers behind them, and hold on to everything for six years from the end of the last tax year it relates to. The CRA doesn’t require a particular system or software, so a tidy spreadsheet and a folder of receipts can meet the minimum. What matters is that someone else could pick up your records and follow the money from a bank deposit to an invoice.
What records does the CRA expect?
Records, in the CRA’s words, are all your accounting and other financial information documents. That’s broad on purpose. The business side breaks down like this.
| Record | Applies to |
|---|---|
| Income and expense records, with the source documents | Every business |
| Motor vehicle records | Anyone claiming vehicle costs |
| Property records | Anyone with equipment or buildings |
| GST/HST records | Registered businesses |
| Payroll records | Businesses with employees |
| A trail from each entry back to a document | Every business |
The last row is the one people skip. An entry in a spreadsheet saying “supplies, $84” isn’t proof. The invoice or receipt behind it is.
How long do you have to keep them?
Six years from the end of the last tax year they relate to. So a receipt from March 2026, in a calendar-year business, stays until the end of 2032. The clock runs from the end of the year, not the date on the paper.
There are a few twists. If you stop running an unincorporated business, the six years run from the end of the year you closed. A corporation that dissolves keeps its records for two years after the dissolution date. If you want to destroy records early, the CRA allows a request on Form T137 in special circumstances. It isn’t automatic.
Electronic records count. But they have to stay in a readable format the whole time, and the CRA expects a backup. If your software company folds or you stop paying for it, you still have to be able to open the file.
Do you have to register for GST/HST?
Only once you’re past the small supplier limit. That’s $30,000 of taxable sales over four consecutive calendar quarters, or in a single quarter. Cross it in one quarter and you must charge tax from the day of the sale that took you over. Cross it over several quarters and you stop being a small supplier at the end of the month after the quarter in which you went over. In both cases you register within 29 days.
You can also register earlier, on purpose. Some businesses do so to claim tax on their purchases. We won’t advise on that here, since it changes with the type of sales you make.
Once you’re in, your books need a separate line for tax collected and tax paid. The GST/HST calculator shows the split, for example $3,900 of HST on $30,000 in Ontario, and the HST reverse calculator pulls tax back out of a total.
What do good bookkeeping requirements look like in practice?
Something you’ll actually keep up. A business bank account, a folder for receipts (scanned or paper), an invoice log and a monthly check that your records match the bank statement. Twenty minutes on a Friday does more than a marathon in April.
Here’s why it pays. A sole proprietor in Ontario with $60,000 of net income owes $14,602.92 in income tax and CPP, according to the self-employed tax calculator. If $3,000 of real costs never made it into the books, the same person on $57,000 owes $13,652.96. The missing records cost $949.96. That’s an estimate, and it leaves out EI and GST/HST, but it shows what a lost receipt does.
Once you owe more than $3,000 a year, instalments start. At $6,000 owing, the tax instalments calculator shows four payments of $1,500. If you have staff, the payroll remittance calculator shows what each pay period adds, and $2,000 gross every two weeks in Ontario comes to $555.05 sent to the CRA.
Do you need accounting software?
No. The requirement is the records, not the tool. A spreadsheet works for a one-person business with a few dozen transactions a month. Software starts to earn its keep when you have GST/HST to track, staff to pay or a lot of invoices going out, because it keeps the trail from each entry back to the document without much effort from you. If you do pick software, make sure you can export your data, since you need to be able to read your records for six years even if you stop paying the subscription.
What does a simple monthly routine look like?
- Move every receipt and invoice from the month into one folder, scanned or paper.
- Match each bank and card line to a receipt or invoice, and flag the ones you can’t match.
- Record the sales tax you collected and the tax you paid, if you’re registered.
- Write the date you did it on the folder or in a log, so you can see the gaps.
Kiran runs a small bike repair shop in Winnipeg and does exactly this on the last Friday of the month with a coffee. It takes him about half an hour, and in April the return is a quick job rather than a weekend of digging through a shoebox.
What mistakes and limits should you know about?
Mixing personal and business spending is the big one. It makes every review harder, and it makes the trail from entry to document break.
Next is throwing out receipts at six years and one day, when a return under review reaches back further. Keep the whole period. Then there’s the reverse: keeping the records but no way to read them, because they sit in an old program.
One more limit. This page is about the federal rules. Provinces and some industries may add their own record duties, and we couldn’t confirm those, so check with your province. If you’d like a second pair of eyes on your set-up, read our pages on moving from DIY to professional bookkeeping and on red flags when hiring an accountant.
Our sources
The record types, format rules and the six-year period come from Canada Revenue Agency pages on keeping records and on retention and destruction (IC78-10). The $30,000 limit and the 29-day rule come from the CRA’s GST/HST registration page, and the calculator examples use 2026 data. This is an independent guide, separate from any government body.
Frequently asked questions
How long must a small business keep its records?
Six years from the end of the last tax year they relate to. A dissolved corporation keeps records for two years after dissolution.
Do I have to use accounting software?
The CRA pages we read don't require one. Electronic records must stay readable and backed up, and paper is allowed.
When do I have to register for GST/HST?
When taxable sales pass $30,000 in a single quarter or over four consecutive quarters, and you register within 29 days.
Can I destroy records early?
Only with CRA permission in special circumstances, requested on Form T137.
What happens to records if I close my business?
For an unincorporated business, the six years run from the end of the tax year in which it closed.
- 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