CRA requires you to keep records for six years from the end of the last tax year.

Yes. It keeps business and personal expenses separate and makes bookkeeping (and CRA reviews) easier.

Bookkeeping = tracking daily transactions.
Accounting = interpreting the numbers for tax planning and business decisions.

You can do it yourself, but hiring a bookkeeper saves time and reduces mistakes, especially at tax time.

Popular choices: QuickBooks Online, Xero, Sage or Wave. All support Canadian tax rules.

Ideally weekly or monthly. Waiting until year-end causes errors and stress.

Cash basis = record when money changes hands.
Accrual basis = record when income/expenses are earned or incurred. Most incorporated businesses must use accrual.

You need to register for GST when your business earns $30,000 or more in a 12-month period, sole proprietorship or incorporated business.

Yes, but only the business-use portion. CRA has specific rules. For more details, see our blog HERE

You have six months after your year-end to file, but any tax owing is due two or three months after your year-end (depending on size of business).

You may face interest/penalties if taxes are wrong. CRA may audit. Correcting errors quickly helps reduce risk.

Depends on your province and what you sell. Some provinces (e.g. BC, SK, MB) charge PST separately.

You need to open a CRA Payroll Account, then withhold CPP, EI, and income tax from employee pay.

CPP, EI, and income tax. You remit both the employee portion and employer portion.

Usually monthly, but CRA may require quarterly, twice monthly, or weekly depending on size.

No. Contractors handle their own taxes. But make sure they are truly contractors, not employees (this will be dependent on certain factors).

Employees = T4 slips, payroll records.
Contractors = invoices, T4A slips if you pay $500+ in a year.

Yes. Sole proprietors report on their personal tax return. Corporations file a separate corporate tax return in addition to the owners’ personal tax returns.

Salary = payroll expense.
Dividends = shareholder distribution, not an expense. Impacts taxes differently.

Keep a log of all income and receipts for business expenses. Software or spreadsheets work fine.

Digital is fine, as long as the copy is clear and legible.

Record them like any other payment—just ensure you note who/what it was for and preferably have an invoice or receipt as reference.

Match transactions in your books to your statements monthly to catch errors.

Yes, but record it as an owner contribution so it’s tracked properly.

Convert the transaction into Canadian dollars and post it using the exchange rate on the transaction date. CRA accepts Bank of Canada rates.

Bookkeeping = records daily transactions.
Accounting = interprets those numbers to prepare financial statements, analyze results, and plan taxes.

Yes. A bookkeeper records transactions, while an accountant ensures compliance, prepares tax returns, and provides financial advice.

At least annually for tax filing. Many small businesses benefit from quarterly or semi-annual check-ins.

Balance sheet, income statement, and cash flow statement. These give you a full picture of your business health.

Accounting provides insight into profitability, cash flow, and costs, helping you make informed decisions.

We suggest you refer to this list every year to ensure you provide us everything you are entitled to a refund for: Personal Tax Checklist

Here is a specific list of what can be claimed as an employee. Your situation may vary, so ask us if you are not sure: Employment Expense Checklist

This is a basic list of what can be claimed in a business. Your situation may vary, so ask us if you are not sure: Business Expense Checklist

This article discusses the rates of interest, EI, CPP, income tax, corporate tax, etc.: All Rates

This article discusses the rates of various late filing penalties and interest: Late Filing and Penalties

General topics addressing GST questions

This article discusses corporate tax instalment requirements: Tax Instalment Requirements

Corporate tax is paid by incorporated businesses on profits. Sole proprietors and partners report business income on personal returns.

Incorporation can provide tax advantages and limited liability but adds complexity. Speak with an accountant to assess your situation as sometimes incorporating can be less advantageous depending on your situation.

It allows Canadian-controlled private corporations (CCPCs) to pay a lower tax rate on the first $500,000 of active business income.

Home office expenses, vehicle use, expenses paid by owner personally, capital cost allowance (CCA), and professional fees.

CRA charges penalties and daily interest on the balance owing. Filing on time avoids extra costs. If there is no tax owing, there will be no penalty or interest.

It shows your assets (what you own), liabilities (what you owe), and equity (what you’ve made through the years) all at one point in time.

It shows your revenue, expenses, and profit (or loss) over a period of time.

It tracks cash moving in and out of your business, highlighting your ability to meet obligations.

They provide a full picture: the income statement shows profitability, the balance sheet shows stability, and the cash flow shows liquidity.

Because profit includes non-cash items and timing differences. For example, unpaid invoices count as revenue but don’t add cash until collected.

It depends on your tax situation. Salary creates RRSP contribution room and CPP credits, while dividends are taxed differently and don’t require CPP.

Salary means you contribute to CPP and possibly EI. Dividends do not require CPP/EI but also don’t build benefits.

It tracks money you personally (as an owner) put into or take out of the corporation. Proper records prevent CRA issues.

They must perform actual work and be paid a reasonable wage. Otherwise, CRA may deny the deduction.

Review margins, expenses, and cash flow regularly. They reveal trends and areas to cut costs or invest.

It shows the sales level needed to cover costs. Knowing this helps with pricing and planning.

Review cash flow and profit margins. An accountant can project the impact of payroll on your finances.

Keep organized, accurate records. Work with your accountant to ensure compliance before an audit occurs.

Lenders want accurate financial statements and tax compliance. Strong accounting increases your credibility.

Yes, but rules apply. For example, only 50% of meal and entertainment costs are usually deductible. For more details, see our blog HERE

Capital items (like vehicles, equipment, large tools, office furniture, computers, etc) are depreciated over time using CCA. Regular expenses are deducted in full when incurred.

Depreciation applies to tangible assets (like equipment), amortization to intangible assets (like goodwill).

Yes. Canadian residents must report worldwide income. Large foreign assets may require extra CRA forms (T1135). It is very important to ensure your accountant knows about anything you own outside of Canada, as large penalties could be incurred if those assets are not reported. For more details, see our blog HERE.