Small Business Bookkeeping in Canada: GST/HST, CRA Records and CAD/USD Accounts
Bookkeeping fundamentals are the same on both sides of the border — categorize transactions, reconcile accounts, report monthly. But Canadian small businesses have a few specific requirements that shape how their books should be set up: GST/HST and provincial sales taxes, CRA record-keeping rules, and often a mix of CAD and USD transactions. This guide covers what to get right.
This article is general information, not tax or legal advice. Confirm your specific obligations with a Canadian CPA or the Canada Revenue Agency (CRA).
1. Use the Canadian edition of your accounting software
QuickBooks Online and Xero both have regional editions. The Canadian versions handle GST/HST, PST and QST tax codes and Canadian reporting. In QuickBooks Online, the country is set when the company is created and can’t simply be switched later — so if your file was set up in the wrong region, plan a migration rather than a workaround. Our QuickBooks Online and Xero support covers setup and migration.
2. Track GST/HST and provincial sales tax correctly
- Registration. Businesses generally must register for GST/HST once taxable supplies exceed $30,000 in a single calendar quarter or over four consecutive calendar quarters (the small supplier threshold). Some businesses register voluntarily.
- Collected tax is a liability. GST/HST you charge customers belongs in a payable account, not in revenue.
- Input tax credits (ITCs). GST/HST paid on eligible business purchases can usually be claimed — but only with proper supporting documents. Keep invoices and receipts that show the supplier’s GST/HST number where required.
- Provincial taxes. Depending on where you sell, you may also deal with PST (British Columbia, Saskatchewan, Manitoba) or QST (Quebec), which are administered separately.
- Reconcile the tax accounts. Each filing period, the GST/HST payable balance in your books should tie to the return your accountant files.
3. Keep records for at least six years
The CRA generally requires businesses to keep books and records — including receipts, invoices, bank statements and supporting documents — for six years from the end of the last tax year they relate to. Digital copies are generally acceptable if they are complete and readable. Receipt-capture tools such as Dext or Hubdoc make this easy.
4. Handle CAD and USD accounts properly
Many Canadian businesses sell to US customers or pay US suppliers. If you hold a USD bank account or card:
- Turn on multi-currency in QuickBooks Online or Xero before recording foreign-currency transactions.
- Reconcile each foreign-currency account in its own currency against its own statement.
- Record bank exchange fees separately so they don’t distort revenue or expenses.
- Let your software calculate realized and unrealized foreign exchange gains and losses rather than adjusting balances by hand.
5. Separate business and personal finances
Use dedicated business bank and credit card accounts. For incorporated businesses, amounts the owner takes out or puts in should be recorded clearly (for example, through a shareholder loan account) so your accountant can treat them correctly at year-end.
6. Record payroll from your payroll provider’s reports
If you have employees, payroll deductions and remittances to the CRA have strict deadlines. Most small businesses use a payroll provider. Your bookkeeping should record each payroll’s gross wages, employer contributions, deductions and net pay from the provider’s reports, and reconcile payroll liabilities each month.
7. Close the books monthly
A consistent monthly close — reconcile every account, clear uncategorized items, review receivables and payables, and produce a P&L and balance sheet — keeps GST/HST filings and year-end simple. Our monthly bookkeeping checklist applies to Canadian businesses too.
Bookkeeping support for Canadian businesses
AccoTiva provides remote monthly bookkeeping, catch-up and cleanup and bank reconciliation for small businesses across Canada and the United States, including CAD and USD accounts. We work alongside your accountant, who handles tax filings. Book a free consultation.