This guide reflects the rules for the tax year ending December 31, 2025.
It applies to individuals filing their 2025 tax return in 2026.
Good bookkeeping is essential for self-employed Canadians. It ensures accurate tax reporting, maximizes deductions, and protects you during a CRA audit. This guide explains what records you must keep, how long to keep them, and how to organize your bookkeeping for the 2025 tax year.
🧭 1. Why Bookkeeping Matters #
Accurate bookkeeping helps you:
- Track income and expenses
- Maximize deductions
- Calculate GST/HST
- Prepare for tax season
- Avoid CRA penalties
- Support your claims during an audit
CRA requires self-employed individuals to maintain complete and organized records.
📁 2. What Records You Must Keep #
CRA requires you to keep:
✔ Income records #
- Invoices
- Sales receipts
- Bank deposits
- Payment processor statements (Stripe, PayPal, Square)
✔ Expense records #
- Receipts
- Bills
- Contracts
- Subscription invoices
- Mileage logs
- Home office calculations
✔ GST/HST records (if registered) #
- GST/HST collected
- GST/HST paid (ITCs)
- Filed returns
- CRA correspondence
✔ Asset records #
- Purchase invoices
- CCA class documentation
- Disposal records
🧾 3. How Long You Must Keep Records #
CRA requires you to keep all business records for:
6 years from the end of the tax year #
Example:
For the 2025 tax year, keep records until December 31, 2031.
If CRA audits you, the retention period may be extended.
📊 4. Bookkeeping Methods (Choose One) #
You can use:
✔ 1. Spreadsheet bookkeeping #
Simple and effective for small businesses.
✔ 2. Accounting software #
Examples include:
- QuickBooks
- Wave
- FreshBooks
- Xero
✔ 3. Bookkeeper or accountant #
Best for growing businesses or complex finances.
💼 5. Income Tracking #
You must track:
- Date of payment
- Client name
- Invoice number
- Amount received
- GST/HST collected (if applicable)
- Payment method
Tip #
Match every deposit in your bank account to an invoice.
🧾 6. Expense Tracking #
For each expense, record:
- Date
- Vendor
- Amount
- GST/HST paid
- Category (office, travel, meals, etc.)
- Business purpose
Receipts must be:
- Legible
- Itemized
- Stored digitally or physically
CRA accepts digital copies.
🚗 7. Mileage Log Requirements #
If you claim vehicle expenses, CRA requires:
✔ A full logbook for the first year #
- Date
- Destination
- Purpose
- Starting and ending odometer readings
✔ A simplified logbook for future years #
If your usage is consistent.
🏠 8. Home Office Tracking #
You must track:
- Workspace size
- Total home size
- Percentage used for business
- Eligible expenses (utilities, rent, insurance, etc.)
Keep all bills and calculations.
🧮 9. GST/HST Bookkeeping (If Registered) #
You must track:
✔ GST/HST collected #
On invoices.
✔ GST/HST paid #
On business expenses (ITCs).
✔ Filing deadlines #
Annual, quarterly, or monthly.
✔ CRA remittances #
Amounts paid and dates.
📦 10. Organizing Your Records #
A simple folder structure works well:
Digital storage is acceptable if:
- Files are backed up
- Files are legible
- Files are accessible to CRA if requested
🧮 11. Example: Monthly Bookkeeping Workflow #
At the end of each month: #
- Record all income
- Record all expenses
- Upload receipts
- Update mileage log
- Reconcile bank statements
- Track GST/HST collected and paid
- Update CCA assets if applicable
This prevents year‑end chaos.
❓ 12. Frequently Asked Questions #
Can I keep digital receipts? #
Yes — CRA accepts digital copies.
Do I need a business bank account? #
Not required, but highly recommended.
Do I need accounting software? #
No — spreadsheets are acceptable.
What happens if I lose a receipt? #
You must document the expense and explain why the receipt is missing.
Can CRA audit me? #
Yes — CRA audits self-employed individuals more frequently.
🔗 13. Related Guides #
- Self-Employed Taxes in Canada
- Self-Employment Tax Deductions
- Self-Employment Expenses
- GST/HST for Self-Employed Canadians
- CPP for Self-Employed Canadians
