Small Business Record Keeping in Canada: What the CRA Actually Requires

Most owners think about record keeping the way they think about flossing. They know they should, they mean to, and then a year goes by and there is a shoebox of receipts and a vague feeling of dread. We get it. But the rules here are not complicated, and getting them right is the cheapest insurance a small business can buy.

We spent years inside the CRA audit division before we started Better Books Canada. The single thing that separated a calm review from a painful one was almost never how much a business earned. It was whether the records were there. So here is the plain version of what a Canadian small business is actually required to keep, for how long, and in what form.

The short answer

You have to keep organized records of everything that affects your business income and expenses, with the source documents that back them up, and you generally have to keep them for six years. The records have to be in English or French, and they have to be readable, whether they live on paper or on a computer. That is the whole obligation in three sentences. It is also what separates a business owner from someone with a simple personal return, who may qualify for free CRA tax filing for lower income Canadians. The rest of this article is the detail behind it.

The CRA calls this your books and records, and it is a legal requirement, not a suggestion. You can see the agency’s own overview on its keeping records page.

What records you actually have to keep

Your records fall into two buckets, and you need both. The first is the summary layer, the books that record your income and expenses. The second is the proof layer, the source documents that show each number is real.

On the income side, keep your sales invoices, cash register tapes, receipts you issued, fee statements, and contracts. On the expense side, keep the receipts and bills for everything you bought for the business, along with bank and credit card statements, cancelled cheques, and any work orders or contracts. If you charge GST or HST, keep the records that support what you collected and the input tax credits you claimed. The CRA spells out these requirements for self employed owners on its business records page. None of that changes if you elect the GST/HST quick method, which removes the credit calculation from your return but not the six year record rule.

Here is the part owners miss. A bank statement is not a receipt. The statement proves money left your account. The receipt proves what it bought and why it was for the business. In an audit, only the second one defends the deduction, which is exactly why clean receipt and invoice storage matters as much as the bookkeeping itself.

How long you have to keep them: the six year rule

Keep your records and supporting documents for six years from the end of the last tax year they relate to. For most small businesses on a December year end, that means a 2026 record has to survive until the end of 2032. One record runs on its own clock: a vehicle logbook used as a base year has to be kept for six years from the end of the last tax year it was used to establish business use, which can be years after it was written. The rule is set out on the CRA page covering where to keep records, for how long, and how to request permission to destroy them early.

Two wrinkles are worth knowing. If you file a return late, the six year clock starts from the date you actually file, not the original due date. And if the CRA asks you in writing to hold records longer, you have to keep them until they tell you otherwise.

The records you keep longer, and the ones you cannot toss early

Some records outlive the six year window. Anything tied to the long term purchase or sale of property, your share registry if you are incorporated, and other historical information that could affect the eventual sale or wind up of the business should be kept indefinitely. Think of the documents you would need to calculate a gain years from now, not the everyday receipts.

You also cannot just shred the rest the moment six years passes if you want to clear them early. To destroy records before the retention period ends, you need written permission from the CRA, usually by filing Form T137. Destroying records without that permission can lead to prosecution, so when in doubt, keep them or ask first.

Paper, digital, or both

You can keep records on paper, in electronic format, or as scanned images of your paper documents. The CRA accepts scans of paper receipts as long as you follow and document proper imaging practices, which for a small business mostly means clear, complete, unaltered copies stored somewhere reliable. The format rules are laid out on the CRA’s page on the acceptable format for records.

Two requirements apply no matter which format you choose. First, the records have to be in English or French, and if a document is in another language you need to be able to provide a translation. Second, if you keep records electronically, they have to stay in an electronically readable format, which means a CRA auditor could process and analyze them, not just look at a printout. A folder of photos with no organization technically exists, but it is not really a system.

This is where a cloud based setup earns its keep. We run our clients on QuickBooks Online with receipts attached to transactions, so the proof sits right behind every number and nothing depends on a box in a basement. If you want the bigger picture on doing the books right, our guide to common bookkeeping mistakes to avoid covers the habits that keep records audit ready.

Where to keep them

As a rule, your records should be kept at your place of business or your residence in Canada, unless the CRA gives you written permission to keep them elsewhere. If you store data on a server outside the country, the CRA can still require that the records be made available in Canada. The same rule catches point of sale records when a business changes terminals, because the electronic data is the record rather than the printed tape. For most owners this is a non issue, but it matters if you are tempted to keep everything on a foreign cloud service and nothing locally.

What this looked like from the auditor’s chair

When we ran reviews, the first request was almost always the same: show us the records. That one ask told us how the rest of the audit would go. A business that could pull a receipt to match a claim in under a minute got a short, calm review. A business that handed over bank statements and shrugged got a long one, because the burden flipped to them to prove every line. Getting to that request at all is a separate question, and we cover what triggers a CRA audit in its own guide.

We once reviewed a small contractor who had genuinely run an honest year. The problem was that the receipts lived in a truck, a kitchen drawer, and a few email inboxes, with no system tying them to the books. Nothing was fake. But reconstructing it took weeks, the stress was real, and a couple of expenses got disallowed simply because the paper could not be found in time. The lesson was never that he spent wrong. It was that good records are what turn a true expense into a defendable one.

The owners who sailed through were not the ones with the least to hide. They were the ones who could show the why behind each number on demand. If you want the full view from this side of the desk, we wrote a companion piece on what auditors look for during a CRA audit.

Frequently asked questions

How long does a small business have to keep records in Canada?

Generally six years from the end of the last tax year the records relate to. If you file a return late, the six years runs from your filing date instead. The CRA can also ask you in writing to keep specific records longer.

Do I need to keep paper receipts, or are bank statements enough?

You need the receipts. A bank statement only shows that money moved, not what it bought or why it was for the business. The CRA can disallow expenses that are backed only by statements.

Can I keep my business records only as digital scans?

Yes. The CRA accepts scanned images of paper documents if you follow proper imaging practices and keep them in a readable, accessible format. The records must stay in an electronically readable form, not just a stack of unsorted photos.

Can I throw out records once six years have passed?

Usually yes, but not always. Records tied to property, your share registry, or the eventual sale of the business should be kept indefinitely. To destroy any records before the six years are up, you need written CRA permission, normally through Form T137.

What records does the CRA expect from a self employed person?

Records of all income (invoices, receipts you issued, contracts) and all expenses (receipts, bills, bank and credit card statements), plus anything supporting GST/HST you collected or claimed. They have to be organized and in English or French.

Get your records audit ready and keep them that way

Record keeping is not the part of business anyone loves, but it is the part that protects everything else you build. The owners who never lose sleep over a CRA letter are simply the ones whose proof is always sitting behind their numbers. If you would rather run your business than babysit a shoebox, reach out to our team and we will set up a system that keeps every record where it needs to be, for as long as it needs to be there.

Last updated: June 2026. Verify current rules against canada.ca, since CRA requirements can change.