Updated Checked by the Tax-Services.ca editorial team How we check
A Canadian startup needs a bookkeeping system that keeps every invoice and receipt for six years, tracks GST/HST separately from income, and exports all your data when you outgrow it. Spreadsheets work at low volume, and cloud software helps once you invoice often. We have not tested or ranked any product.
What does the CRA require your bookkeeping to do?
The CRA sets a floor that any system has to meet. Records and supporting documents must be kept for six years from the end of the last tax year they relate to. They belong at your place of business or your residence in Canada, unless the CRA gives written permission otherwise. Electronic records must stay in a readable electronic format for that whole period. For GST/HST specifically, the CRA’s records to keep page says the same six years apply to electronic records and lists the sales and purchase invoices you need.
| Rule | What it means for you |
|---|---|
| Keep records six years | Counted from the end of the last tax year they relate to |
| Keep them in Canada | Home or business premises, unless the CRA agrees in writing |
| Electronic records stay readable | A backup you can’t open doesn’t count |
| Register for GST/HST past $30,000 | In a single calendar quarter or the last four quarters in a row |
| Register within 29 days | Counted from the effective date of registration |
That last pair is why a sales-tax feature matters sooner than you’d think. Once a single quarter of taxable sales passes $30,000, your registration takes effect on the sale that crossed the line. If you pass it over four quarters in a row instead, the CRA says you stop being a small supplier at the end of the month after that quarter. Either way, register within 29 days of the effective date.
Spreadsheet, software or a bookkeeper?
All three can work. It comes down to volume, and to who’s doing the work.
A spreadsheet is fine while you have a handful of invoices a month, no employees and no sales tax. It falls apart when you need to reconcile a bank account or find a receipt from two years ago.
Cloud accounting software starts to pay off once you invoice regularly, hold a business bank account or register for GST/HST. Look for bank feeds, invoice numbering, receipt capture and a sales tax report you can read. Payroll is a separate step. If you hire, our payroll remittance calculator shows what an employer sends to the CRA.
A bookkeeper makes sense when you’d rather not do it yourself. We couldn’t confirm typical fees, so ask for a written scope and price before you agree to anything.
Questions to ask before you pick a system
- Can it handle the provincial rate where you sell, including HST, or GST plus PST or QST?
- Can you export every transaction to a spreadsheet, so you’re never locked in?
- Does it store receipts as images, and can you open them years from now?
- Where is the data kept? The CRA says records must be kept at your place of business or residence in Canada, and it treats records on servers outside Canada as a special case that needs its permission and access from Canada.
- Can your accountant log in without you sending files back and forth?
How sales tax shows up in your books
Here’s a concrete case. You invoice a client in Ontario for $10,000. HST at 13% adds $1,300, so the client pays $11,300, as our GST/HST calculator confirms. That $1,300 isn’t your income. It belongs to the CRA, and your books should park it in a tax account.
Now the other side. You buy a laptop for $2,260 with tax included. The HST reverse calculator splits it into $2,000 and $260 of HST. Registered businesses can usually claim that $260 back, and your receipt is the proof. Software that separates the two amounts for you saves an ugly afternoon at filing time.
What should a first week of setup look like?
Keep it small. Day one: open the business account and card. Day two: pick the tool and connect the bank. Day three: set up a few categories you’ll actually use, such as software, travel, meals, office and advertising, rather than forty you won’t. Day four: take a photo of every receipt in your wallet and drop it in the app. Day five: write down the date you’ll sit down each week, and stick to it.
That routine takes maybe ten minutes a week once it’s running, and it beats a shoebox in April every time. If you pay for a coffee for a client, it goes in the same week, not next quarter.
Mistakes startups make
The first is mixing personal and business money. One shared account turns every month-end into a guessing game. Open a separate account early, before the first client payment lands.
The second is waiting until tax season. Nobody remembers what a $47 charge in March was for. Categorize weekly, even if it takes ten minutes.
Third, forgetting the sales tax threshold. Track your taxable sales every quarter, because you can cross $30,000 in one strong quarter. Not sure what you’ll owe? Use the self-employed tax calculator to size up a year, keeping in mind it leaves out EI.
Sources, and how we checked them
Checked in November 2026 on canada.ca: the CRA page on how long to keep records (six years, kept in Canada, electronic records) and the page on when to register and charge GST/HST ($30,000 small supplier limit, 29 days to register). The 13% Ontario HST rate is the one used in our calculators. We have not verified prices, discounts or feature claims for accounting products, so this page makes none. Check each vendor’s own page before you sign up. More reading: handling accounts receivable, e-commerce GST/HST rules and our guide for the self-employed and small business.
Frequently asked questions
How long must a Canadian startup keep its records?
Generally six years from the end of the last tax year they relate to, unless the CRA gives permission to destroy them earlier. Some records, such as those for long-term property, are kept longer. Electronic records must stay readable for the whole period, so test that a restored backup actually opens.
Can I use a spreadsheet for bookkeeping?
Yes, while volume is low: a handful of invoices a month, no employees and no sales tax. Move to software once you reconcile a bank account every month, charge GST/HST, hire staff or need to find a receipt from two years ago without searching your inbox.
When must a startup register for GST/HST?
When taxable sales pass $30,000 in a single calendar quarter or over four consecutive calendar quarters. In the single quarter case the registration takes effect on the sale that crossed the limit, and the CRA says to register within 29 days of the effective date.
What should bookkeeping software do about sales tax?
It should keep GST/HST collected and paid apart from income and expenses, use the right provincial rate, and produce a report you can read at filing time. For a $10,000 Ontario invoice, the $1,300 of HST belongs in a tax account, not in revenue.
Does my bookkeeping data have to stay in Canada?
The CRA says records must be kept at your place of business or residence in Canada. Electronic records on servers outside Canada are only acceptable with the CRA's permission and if officials can read them from Canada. Ask any software vendor where it stores your data.
- 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