Running a small business in Ontario comes with a unique set of financial responsibilities. Whether you’re a freelancer, consultant, or own a growing business with employees, maintaining clean, organized books is critical. Not only for staying compliant but also for making informed decisions and growing sustainably.
In this post, we’ll cover essential bookkeeping best practices, tailored specifically for Ontario’s regulatory environment, including how to handle HST (Harmonized Sales Tax) tracking and compliance.
One of the most important steps for any small business owner is to open a dedicated business bank account and, ideally, a separate business credit card. Keeping personal and business expenses separate makes bookkeeping more accurate and reduces headaches during tax season or if you’re ever audited.
Tip: Set up automatic transfers to a savings account for taxes and future expenses to avoid surprises.
2. Use Cloud-Based Accounting Software
Modern accounting tools like QuickBooks Online make it easy to track income, expenses, taxes, and invoices. These platforms are especially helpful for:
• Auto-categorizing transactions
• Tracking HST collected and paid
• Generating financial reports
• Integrating with your bank and other tools
If you’re not yet using cloud software, switching can save time, reduce errors, and help you stay organized.
3. Track HST Correctly (And Know When You Need to Register)
In Ontario, you must register for an HST number with the CRA once your taxable revenues exceed $30,000 in a single calendar quarter or over four consecutive quarters.
Once registered, you must:
• Charge 13% HST on most goods and services
• Track HST collected on sales
• Track HST paid on business expenses (Input Tax Credits)
• File HST returns (monthly, quarterly, or annually, depending on your reporting period)
Failing to track HST properly can lead to costly penalties. It’s essential to set up your accounting software to track HST from day one—even if you haven’t registered yet. This way, you’re ready as soon as you cross the threshold.
4. Keep Your Records Organized and Accessible
The CRA requires businesses to retain records for at least six years. This includes:
• Invoices
• Receipts
• Bank statements
• Payroll records
• HST filings
Organize your records digitally whenever possible. Scan receipts and name files clearly by date and category. Most accounting platforms offer built-in receipt tracking or integrate with tools like Dext.
5. Stay On Top of Reconciliations
Bank and credit card reconciliations should be done at least monthly. This ensures your books reflect reality and helps catch any errors or fraudulent activity early.
Many cloud platforms offer bank feed integrations to streamline this process. Still, it’s essential to review and reconcile regularly, especially before HST filings or year-end.
6. Don’t Forget Payroll and Contractor Payments
If you have employees or hire contractors, make sure you’re compliant with:
• Payroll deductions (CPP, EI, income tax)
• T4s and T5s at year-end
• WSIB premiums, if applicable
• Contracts and proper documentation for independent contractors
Also, note that HST does not apply to wages, but may apply to contractor services, depending on how they invoice you.
7. Work With a Professional (Even Part-Time)
Even if you manage your books yourself, having a bookkeeper or accountant review them periodically can save you from costly mistakes. Professionals can help with:
• HST filings
• Year-end tax prep
• Strategic advice on deductions, budgeting, or incorporation
• Payroll and compliance support
If you’re not ready to hire someone full-time, consider using a bookkeeping service for monthly check-ins or quarterly reviews.
Final Thoughts
Good bookkeeping is more than just tax prep, it’s the foundation of a healthy, growing business. In Ontario, where HST compliance and CRA regulations can feel overwhelming, establishing solid systems early can give you peace of mind and keep your business on track.
Whether you’re just starting out or looking to improve your current setup, implementing these best practices will save you time, money, and stress.