This is the year you get all your ducks in a row!

Essential Bookkeeping Habits For Audit Ready Books in Canada

Bookkeeping Compliance Help For The Work From Home Business Owner

Logo by Mike

Publisher: L. Kenway BComm CPB Retired | Modified November 2025

This website is all about essential bookkeeping habits for audit ready books. It's a free resource for Canadian work from home - WFH business owners and bookkeepers who want to have audit ready books. Let me take you on a journey to solve the puzzle of good bookkeeping compliance practices in Canada ... because KNOWLEDGE puts money in your pocket and keeps you off the Canada Revenue Agency's (CRA) radar.

Remember doing your bookkeeping and other administrative paperwork REGULARLY beats doing it perfectly ONCE IN A WHILE. Each small compliance habit you build (no matter how simple) moves you closer to audit-ready books.

Jump To  >> Tax Compliance Basics | Compliance Responsibilities | Can't Pay Your Taxes? | Filing & Paying Online |  Vehicle Expense Reimbursement | Platform Economy Rules | Retirement Savings System | Tax Rates Overview | Building Compliance Habits  | FAQ Links |  Core Compliance Topics | The Habit of Self-Care | About This Site

Help getting all your ducks in a row

Tax Filing & Payment Deadlines

Common Tax Deductions (T2125)

Sales Tax Questions


Essential Bookkeeping Habits Resources

Start with these core topics to build your compliance foundation:

Small Business Compliance Reporting DeadlinesSmall Business Tax Deadlines
Hit target with audits ready booksAudit Ready Books
CRA Tax Deductions for Sole ProprietorsAllowable Tax Deductions
Hiring Independent ContractorsIndependent Contractors
GSTHST taxes giving you a headache?Canadian Sales Tax Guide
Payroll Tax RequirementsCanadian Payroll Tax Guide



Before we dive in, everything here is specific to small Canadian businesses and CRA requirements. It is written for the solopreneur or freelancer, the self-employed work from home business owner or bookkeeper whose niche is small business.

This site may not be a good fit if:

  1. You are wanting to learn bookkeeping. There are many sites and programs that do that. My bookkeeping-essentials.com site does offer good bookkeeping practices, but you need a foundation first. It walks self-employed business owners through how to tackle their bookkeeping administration. This site is about compliance administration.
  2. You work for a medium or large corporation. Procedures for that size of business are often more complex, so some of my suggestions won't fit your situation. Your accountant (or boss) would be a better resource. That said, this site might help you frame better questions for your accountant and help you understand their responses.
  3. You're in the U.S. or another country. The rules here are based on Canadian law and CRA regulations, so they likely won't match your situation.

You Didn't Start Your Business To Become A Tax Expert, But Here's The Reality

To be a successful business owner, you need to have a basic understanding of compliance tax. Surprise!

Even if you "don't do taxes" (I heard this a lot from bookkeepers and business owners) as a small business owner, you or your bookkeeper need to understand the basics to prepare a CRA compliant set of books.

What does 'tax' encompass? It's not just income tax. Think GST HST PST, payroll taxes, excise tax, income tax installments ... these are all forms of tax ... so surprise, you do "do tax"!

And here's what matters most. As a small business owner in Canada or as a bookkeeper working from home, YOU know small business tax planning doesn't happen when you file (or not!) your mandatory tax compliance returns ...

Tax planning happens EVERY day throughout the year.

Every time you decide how to categorize an expense. Every time you track your mileage (or don't). Every time you keep (or don't keep) a receipt. These small daily decisions either put money in your pocket or leave it on the table.

Good compliance practices don't happen on any one particular day.
They aren't an event; they are a HABIT.

By taking the time to learn and know the rules, YOU CAN do all the little things needed to LEGALLY reduce your net taxable income.

SMALL daily habits CAN move mountains.

Mediocrity is a choice;
it’s not always made consciously, but it is still a choice.

Gary Ryan Blair

Here's what I think separates struggling self-employed business owners from successful ones. The successful ones don't treat compliance as a low priority. They integrate bookkeeping and tax planning thoughtfully and intentionally into their daily operations. It's NOT an afterthought but a part of how they run their business operations.

That's what this site helps you do.



SMALL BUSINESS COMPLIANCE RESPONSIBILITIES
Aiming For Consistency Not Perfection


Okay, let's get serious for a moment.

Owning and operating a business in Canada means you have some legal responsibilities. Canada Revenue Agency (CRA) requires regular reporting of Canadian sales tax, payroll taxes, and income taxes. Each province and territory has their own tax related requirements as well. These regulations are often referred to as government compliance requirements.

Getting Your ducks all in a rowIsn't it the perfect time to get all your ducks in a row?

Tax compliance returns and payments should be filed on time. Failure to report and remit by due dates leads to costly penalties and interest charges. This site provides information about essential bookkeeping habits for audit ready books you need to know to put more money in your pocket and avoid these charges (i.e., stop flushing your hard earned money down the toilet!).

Isn't it the perfect time to get all your ducks in a row? If not now, when? At first it seems overwhelming. But once you go through the process a few times, you will be able to relax and find it just another part of your paperwork routine in operating your business.


WHAT TO DO WHEN YOU CAN'T PAY YOUR TAXES 

Can't Pay Your Taxes?What to do when you can't pay your taxes.

Key Takeaways

  1. File on time even if you can't pay to avoid pricey late filing charges.
  2. Pay as much as you can manage when filing to reduce interest charges.
  3. Be proactive and call CRA to arrange a payment plan for the remaining amount owing.

Here's the most important thing to know. File all your various returns (personal and business) on time even if you can't pay the full amount.

This one action saves you from expensive late-filing penalties. And for your personal income tax return specifically, it protects your personal benefits like the GST/HST credit and Canada child benefit.

Yes, you'll still owe interest on the unpaid balance (set quarterly by CRA and compounded daily starting May 1st). But interest charges are WAY less painful than late-filing penalties.

How bad are late-filing penalties for your income tax returns?

Late filing or failure to file penalties for tax returns are 5% of the tax owing plus 1% for each month your return is late to a maximum of 12 months. You could potentially be paying up to 17% on the balance owing ... before interest charges are calculated.

If you were charged a late-filing penalty on three prior year returns, it gets worse. Your late-filing penalty may be 10% of your current year balance owing, plus 2% for each full month your return is late (to a maximum of 20 months).

Late penalties for GST/HST, payroll returns, and other business information returns are calculated differently, but they're equally expensive. The bottom line ... file everything on time.

If possible, pay what you can when filing even if it isn't the full balance. That's how you establish essential bookkeeping habits for audit ready books in your business. It's how you stay in control and stay on track of your compliance responsibilities. Make payment arrangements with CRA for the remaining balance.

Behind on Filing?

Need Help Getting Organized?

Special Circumstances?

If you're like me, you're already wondering, "How do I make sure this doesn't happen again?" I don't know about you, but I like to address my problems head on.

This year, decide you are going to operate a Canadian bookkeeping compliant business. By making bookkeeping compliance part of your identity, it will just become a habit and who you are as a business owner. Do what needs to be done to get all your ducks in a row. Give yourself the gift of less stress in your business life.

Some small business owners choose to close for a day or half a day each week to take care of their back office duties and compliance reporting obligations ... just like small businesses used to do in the "old" days. Does anyone else remember when small businesses were closed on Sundays, Mondays and Wednesday afternoons? Choose a day when business is normally slow as your paperwork day.

It's Easier to File and Pay Online Than Ever Before

Small business owners often catch up on their paperwork at night after a long day. Filing and paying online makes an efficient use of your time. Modern technology advances means more and more small businesses can transition easily and affordably to a paperless system. What's holding you back?

Be Tax Compliant This Year

Did you make a mistake on a tax return you filed with CRA ... or get some more slips after you sent in your tax return?

Find out why you should amend it ... and what form to use.

If you tried CRA's online services years ago and found them clunky or confusing, it's worth giving them another look. They've come a long way.

How CRA's Online Services Have Improved

CRA began moving to a paperless system in 2013, and they've made steady improvements since. You can now:

  • Receive your notices online. (it's a timesaver!)
  • Submit source documents for audits online.
  • File and pay seamlessly through My Account or My Business Account.

Features like these are why fax machines are no longer a necessity in most offices.

About CRA's My Payment Service

CRA introduced the My Payment service in October 2009. (It seems like just yesterday!) The portal lets you pay your business and individual taxes online instantly from your bank account through a secure link with approved Canadian financial institutions. No more mailing cheques or going to the bank.

It's important to note that NO banking information is shared with CRA when you use My Payment services unless you choose the CRA preauthorized payment option. Just follow the instructions and make your selections as prompted.

What You Can Pay Through My Payment?

  • GST/HST
  • payroll deductions
  • corporate income tax
  • excise duties and taxes
  • individual income tax ... and more.

My Favourite Feature (That Was Added In May 2022)

You can now set up a post-dated preauthorized payment (PAP) when you file! Set the date you want the payment taken from your bank account (5 business days is the default). This means you need to file at least a week before any deadline to avoid late payment charges.

If you pay after hours, on weekends, or holidays, the payment is credited the next business day.

Payment Method Options (And My Opinion)

You can pay with:

  • Direct bank transfer - CRA PAP or Bank Tax Payment Services (my preference)
  • Visa Debit introduced in 2016 (ATB, CIBC, BNS, RBC, TD as well as four credit unions) 
  • MasterCard Debit introduced in 2024 (BMO and a long list of credit unions)
  • Interac Debit was discontinued by CRA / Interac Payments as of September 10, 2024

I'm NOT a fan of the debit card method if you have multiple bank accounts. The time I tried it, it didn't let you choose which account to pay from ... it just chose the first account associated with the debit card.

Many banks and fin techs now offer virtual debit cards to use for online payments. They too are accepted on CRA's My Payment online portal. I believe they work similarly to digital wallets in that your actual debit card number is never shared. This, in my opinion, makes using a virtual debit card more secure than entering in your physical debit card details.

CRA never accepts payments from cryptocurrency, gift cards, traveller's cheques, cash by mail, or foreign funds.

As an aside, as a bookkeeper, I used to get to see the various options from many banks while doing the bookkeeping ... the good, the bad, and the ugly!

How to Access The My Payment Portal

Your first step is to register for My Payment. Once you follow CRA's instructions for that process, sign into My Payment. Sounds like it should be an easy thing to do, doesn't it? Yep but it's not in a prominent place anymore.

Here's where it gets a bit tricky. CRA's website is huge, and the My Payment service isn't always easy to find. There are three ways to access the online portal:

Option 1: Through CRA's website 
Go to Canada.ca/en/revenue-agency.html> Payments> Payments CRA>  Payments to the CRA> Make a payment> select the right 'path' for your payment method found under 'Ways to pay'.

One you've found it, it's best to bookmark it for future use. This helps ensure you don't accidentally land on a 'fake / fraudulent' website.

Option 2: Google it 
Search "CRA My Payment" BUT be careful. A few options will come up. Always choose one with a path that says https:/www.canada.ca. Make it a habit to check the URL before clicking. Look for:

  • A lock icon (https site) on the top menu / search bar.
  • The URL must end with canada.ca ... no exceptions.
  • There should be nothing between "canada" and ".ca".

Scam sites are a real problem. Don't get caught.

Option 3: File through My Account or My Business Account (easiest) 
Sign in, file your return, and it takes you directly to My Payment. Seamless. This was introduced in May 2022 and I love it!

CRA's My Payment service is free. The post-dated payment option is great but it has the restriction of the first payment date available to pay is five business days in the future. You can pick a later date too.

What About Using Your Bank's Bill Payment System?

Your bank also offers online payment to CRA, but they charge businesses an administration fee. The advantage? You can set up post-dated payments in advance, which is valuable if:

  • Your payments are significant.
  • An employee handles filing and payment arrangements.
  • You miss a deadline imposed by your accounting platform for automatic payments like payroll taxes.

In most cases, unlike the CRA PAP system, you can request a next day payment.

For personal payments unrelated to your business, you can use your bank's Bill Payment options. The fee is usually subject to Interac fees if applicable. CRA generally considers the payment paid on the same or next business day. That said, sometimes it takes up to 3-5 business days to show up in your CRA accounts.

Vehicle Expense Reimbursement Options

Learning about the essential bookkeeping habits for reimbursement will keep your books audit ready. Because the rules for writing-off business use of auto expenses are complicated and very inflexible, CRA auditors will always examine them. So follow the rules closely if you want your deduction to pass a tax audit.

CRA has three distinct sets of rules for vehicles used for business purposes. Choose the one that fits your circumstances to stay CRA compliant. 


T2125 Self-employed car expensesSelf Employed Car Expenses
Employee owned carEmployee Owned Cars
Canadian company owned fleet of careCompany Owned Cars


How CRA Defines The Platform Economy

One of the essential bookkeeping habits for audit ready books is to learn the CRA rules. If you're earning money online (and let's face it, who isn't these days?) CRA wants you to know they're paying attention.

In 2024, CRA rolled out new reporting requirements for digital platforms. What does this mean for you? If you're selling on Etsy, driving for Uber, renting out your basement on Airbnb, or getting paid through any online platform, CRA now gets information directly from those platforms about your earnings.

Why does this matter? Because CRA can now cross-reference what you report on your tax return with what the platforms report to them. It's not that they're trying to catch you out. It's just that they now have better information to work with. So if you've been a bit ... casual ... about reporting your online income, this is your friendly heads-up that those days are over.

It's important to understand the three-party system. CRA explains that the platform economy is facilitated by digital platforms and usually involves three separate parties:

  • sellers of goods or services (that's you);
  • consumers buying these goods or services (your customers); and,
  • platform operators that use technology to facilitate transactions between sellers and consumers (like Etsy, Uber, Airbnb).

What counts as platform economy income? CRA breaks it down into four main areas:

  1. Sharing Economy: Using and sharing assets like cars (Turo) and spaces (Airbnb, VRBO).
  2. Gig Economy: Short-term contracts, freelance work, or other temporary work that is arranged online or through apps. (Think Fiverr, Clickworker, Crowdsource, Uber Eats, Skip the Dishes).
  3. Peer-to-Peer (P2P): Selling goods online like clothing (Poshmark), crafts including jewellery (Etsy) or pretty much anything else.
  4. Social Media Influencers: If you've got a significant following and you're making money from it, yes, this includes you.

Heads Up! Here's the important part. ALL of this income must be reported on your annual tax return. That includes gifts and donations if they're coming through these platforms as payment for goods or services.

I know it can feel like just a side hustle or "not real income", but CRA sees it differently. And now that they're getting reports directly from the platforms, it's easier than ever for them to spot what's missing.

The good news? If you've been reporting everything all along, nothing changes for you except maybe a bit less paperwork since CRA already has some of the information. And if you haven't been ... well, now's a good time to get your ducks in a row.

More >> Virtual or Electronic Commerce


Source: CRA website - Taxes and the platform economy, Gig economy, How earning from online platforms can impact your taxes

Everyone Has To Save For Retirement 
Even the Self-Employed and Small Business Owners
Start Early To Cushion Future Setbacks

Simple Cash Management System

Small business owners in Canada have several tools and strategies at their disposal for saving for retirement outside of their businesses. It's smart to diversify and not rely solely on the sale of your business to fund your retirement.

More >> A few options for your consideration

Start the habit of treating yourself like you were still an employee with retirement benefits. Don't think you'll ever have the cashflow to setup your own retirement savings plan?

More >> Simple cash management system for the self-employed

Canadian Bookkeeping Tax Rates 
Quick Links

Interest & Tax Rates


Payroll Tax Rates


Sales Tax Rates


Canadian Travel and Vehicle Mileage Rates


Start a Habit With This Resource For Essential Bookkeeping Habits For Audit Ready Books in Canada

My hope is you BUILD THE HABIT of checking in here regularly while you have a coffee, a cup of piping hot green tea or in keeping with the times, a healthy smoothie or cool glass of water.

Take the time to reduce your stress by establishing habits so you know the essential bookkeeping rules that apply to your business. You'll be happy you did once those refund cheques come rolling in or CRA notices and late filing penalty charges disappear.

Most of all, remember to JUST BREATHE! Deep breath in for the count of four. Hold your breath for four counts. Exhale in four counts. Pause for four counts. Repeat five times. You've got this! You just need to get all your ducks in a row.

I'll leave you with a work life balance suggestion to give you the energy boost you need to improve your chance of setting up essential bookkeeping habits for audit ready books this year ...

Self-Care Habits because ...

You are the most important person in your business! Consistent habits beat perfecting routines ... but you can't show up consistently if you are running on empty.


Dr. Will's Breakfast Smoothie | A Meal In A Glass

Great For When You Are Working On A Deadline!

If you are trying to have a better work life balance (Jeff Bezos prefers the term work life harmony) and promised yourself you were going to eat healthier this year; try Dr. Will Bulsiewicz's (a gastroenterologist and author of Fiber Fueled) fast, easy, and portable breakfast smoothie.

Just throw these four ingredients in the blender and blend until smooth.

  • blueberries (fresh or frozen) - [1/2 cup - prebiotic fibre]
  • bananas (fresh or frozen) - [1/2 banana - prebiotic fibre]
  • soy milk - [1 cup - prevents inflammation to improves bone health]
  • broccoli sprouts - [handful or 2 - reduces inflammation]

To bring it to the next level, Dr. Will says you can top it off with some ground flaxseed (for the fiber) and walnuts (for the healthy fats). He encourages you to customize the smoothie to your taste and nutritional goals.

My comments are in [square brackets] as Dr. Will didn't give amounts.


More Lifestyle Tips >>

Headshot for website


About This Site

I'm a retired certified professional bookkeeper. I launched Bookkeeping-Essentials.com in 2009 to help small business owners who couldn't afford a bookkeeper get their books in order. It took on a life of its own over the years.

As I retired in 2020, I separated the Canadian compliance content to this dedicated .ca site. This allows me to provide targeted information about CRA requirements and audit-ready bookkeeping habits specifically for Canadian businesses.

Each article includes clear dating so you know when it was published, revised, updated, or edited. Watch for compliance tips and practical pointers throughout.

I hope you find this a useful resource for building the habits that lead to audit-ready books.

Just Breathe,  Laura

More about me ...


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